How to Manage Risk and Avoid Legal Dispute in relation to Business Relationship ?
In today’s world, Principal and Supplier / Vendor relationship are critical to ensure a sense of harmony in Business Practice. Trust, good communication, and a commitment to mutual understanding and growth are necessary to build relationship between Parties and will provide good Service and Products to Customers.
“ MakeSure You Know Your Counter Part ”
The Principal may have better understanding about their Counter Part with some way and method:
• Verify the License, Permit, and Corporate Documents
• Conduct thorough research on your partner's background and business knowledge beforehand.
• Maintain open and regular communication.
It is aMust to Start with a Mutual Good Faith,for the mutual benefit of the Parties; therefore, the Principal and the Supplier/Vendor may have to share ;
Clear Expectation between Parties to set upactionable plan that will create a productive cooperation,
in this way, the Parties can minimize the risk of misinterpretations andmismatched expectations, because with a proper understanding, the Parties maydeliver the best performance of product or services. The Parties may finalize for ;
“Clear & Strong” written partnership Agreement,
with the aim of establishing a clear and proper contractual relationship between the parties, so as to avoid the risk of unwanted legal conflicts.
LEGAL IMPLICATIONS if a Dispute Arises?
Basic of Legal Risks:
- Breach of Contract
- Tortious Acts
- Criminal Case
These may lead to Financial losses from lawsuits or damages also cost of Legal Fees, reputational harm, Operational Impact, Criminal Risk, and risk of losingany business opportunities
BUSINESS DISPUTE
In some circumstances, Parties may fail to meet delivery timelines or comply with their contractual obligations.
There might be disagreements over costs or changes in prices, or different interpretation on service or product delivery which are not adequately addressed in the contract. Situations such as the alteration of order, quality concerns or differing interpretations of service level agreements also commonly result in contention.
Understandingtriggers and ability to assessrisk wiselyis important in order to establish preventative measures and foster constructive dialogues to address issues before disputes escalate into more serious disputes.Gaining insight objectives from each Party can have positive effect on discussion and useful to avoid further major legal disputes.
“ MakeSure You Know Your Counter Part ”
Strategic Approach to Resolution
1. Resolve the dispute informally
Good relationships are critical. If issues arise, such as a supplier breaching its contractual obligations, try to negotiate a solution informally. This can save time and money as well as preserve long-term commercial relationships.
2. Review supplier agreements, MOU, Written Correspondence
For any dispute with your supplier, your written contract and relevant documents are key. These documents provide evidence of your agreement and can determine the validity of any claim and judgment. Therefore, it is very important for us to maintain complete written (e-mail and chat also counted / non verbal) correspondence as supporting documentation.
3. Seek Advice
Before taking any important decision, it's necessary to discuss with related Supporting Stake Holder such as Legal and Procurement. We may understand our position, the strength of claim and guide you through alternative dispute resolution methods.
4. Taking further legal action
In certain circumstances, when a supplier fails to comply with their contractual obligations and the dispute cannot be resolved through negotiation or mediation, legal action may become necessary. We should ensure that we have all contractual documentation ready to provide, together with relevant documents such as correspondence and other supporting documents. These will provide evidence in relation to our claim.
References:
The analysis in this bulletin is prepared with reference to the legal framework applicable in Indonesia, including the general principles contained in the Indonesian Civil Code (KUHPerdata) and the Indonesian Criminal Code (KUHP).
These codes serve as the primary reference in understanding the fundamental concepts relating to civil and criminal liability, contractual relationships, and potential legal risks that may arise in business interactions.