I know I keep coming back to this but the need for having agreements created and/or vetted by a seasoned attorney is paramount in all commercial documents – particularly when it comes to dispute resolution clauses. Much like a marriage contract where you outline every eventuality, the same applies for partnerships agreements, shareholder agreements, commercial contracts, memos of incorporation and the like.
There has been a marked increase in the number of shareholder and partnership disputes particularly within the SMME sector in South Africa and as a specialist in commercial mediation I have been privy to many a dispute arising where the rules for decision-making have not been thoroughly canvassed in agreements. Shareholder agreements or MOIs for example are set out to furnish certainty in relation to the rights and responsibilities of the company, its shareholders and its directors. A well-crafted agreement should include clauses that manage and provide a speedy and effective process and solution to control disagreements and disputes which are inevitable in many a business life cycle.
As per an amendment by the Rules Board for Courts of Law which came into effect in March 2020, individuals and companies are compelled to declare that they have considered mediation anyway before commencing litigation steps.
The reality is that not only can businesses (and jobs) be saved through mediation and effective dispute resolution but also a considerable amount of money – the cost of mediation vs going to court are unparalleled.
Alarm bells ringing? If you are in a new or mature business relationship you would do well to revisit and review your agreements because when the claws are out you will wish you had put that clause in!
Yours in law