THE ISSUE
At the recommendation of solicitors involved with a dispute, we recently assisted parties with a mediation involving an alleged breach of contract over the supply of goods.
All the pre-mediation formalities were carried out and we commenced the mediation with both parties, each having their solicitors present. We were in fact referred by one of the firms of solicitors who informed us that the matter had been left unsolved for 17 months.
THE MEDIATION
There were two private meetings and the agreement to mediate was signed.
The claimants NOBODY CARES LIMITED ( NCL) stated that the goods ordered from the respondent YES WE CARE LIMITED (YWCL) comprised video recording equipment which totalled £160,000.
Only 60% of the delivery arrived with some of the goods being defective and delivered many days late which meant that NCL could not fulfil a contract to one of their own customers. This was the reason for non-payment.
The supply contract stipulated that in the event of a dispute both parties would have to first try and resolve matters via mediation.
YWC denied the claims being made by NCL.
YWC agreed in the mediation (without prejudice) that they had not delivered all of the goods in a timely manner as they had encountered problems in their production system BUT disputed that there was defective equipment. They had requested the inspection of the defective goods but were not given the opportunity.
NCL would not pay for the order which meant that YWC began to experience cashflow difficulties. The relationship had completely broken down.
It clearly appeared that both parties wanted to move forward and mend the relationship having worked together for over 9 years . It soon became apparent that the former Operations director at NCL had caused some issues in the way she had handled the whole situation since the order was first made. It was this manager who had made the decision not to work with YWC and had chosen a different supplier. This manager had since left NCL.
THE CONCLUSION
An agreement was reached as we worked privately and separately with both parties that :
Immediate payment to be made for the equipment which had arrived and was not defective.
An independent party to be appointed to inspect the faulty equipment and provide a report to both parties. His fees were agreed to paid 50/50 by NCL and YWCL.
It was agreed that both parties would abide by the decision of the independent expert.
A full price would be paid for any equipment which was in good working condition.
Faulty goods to be removed from the trading address by YWCL repaired and then delivered back to NCL after which time the balance of the monies would be paid by NCL .
A sum of £25,000 was payable to the NCL for the trouble and inconvenience they had encountered with the order.
Due to cashflow issues with NCL it was agreed that they would immediately place more orders with the YWCL from their agreed price list. These orders would be fulfilled and when the claimants paid the respondents in full for each order the respondent would the next day after payment pay as sum equivalent to 10% of the order to the claimant to reduce the sum owing of £25,000 until it was fully paid off.
It was agreed that if any future problems arose than the best way of dealing with it in the first instance would be that both Directors of NCL and YWCL would speak to each other to sort things out.
Our fees were split between both parties.
In most cases the disputes can be resolved. It is all about the chains of communication and preserving the existing business relationship.
The mediation process avoided legal action and also a possible liquidation of NCL.
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