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How to Avoid Litigation Against Your Business

By Pieter van Zyl | Bate Chubb & Dickson 

As can be attested by divorcees in particular, litigation and disputes are often traumatic experiences and can be emotionally and financially taxing. Businesses are often perceived as being shielded from this personal experience, but even in larger companies, experience has taught that these disputes distract from the core operations of a business, often to the extent that the core focus of management can shift, with disastrous consequences.

Unfortunately, disputes can sometimes be unavoidable, but there are some important measures one should implement to take to guard against these disputes going to court.

Compliance

The first important step is to ensure that your business complies with all the various laws and regulations affecting it. South Africa’s business-sector is highly regulated and it is important to ensure compliance. For this reason, larger companies employ Compliance Officer’s. An alternative is to approach an attorney to advise on the various pieces of legislation which would affect your business.

Of particular importance is to ensure compliance with:

  • Companies Act
  • Labour Laws
  • National Credit Act
  • Consumer Protection Act
  • Protection of Personal Information Act (POPI)
  • Financial Intelligence Centre Act (FICA)
  • Occupational Health and Safety

Compliance is often industry-specific, and it is accordingly important to be aware of the laws that impact on the specific industry you are involved in.

Legal Awareness

The next step is to be aware and review the legal consequences of every agreement entered into with customers, clients and suppliers. Particularly with larger or more significant transactions, a “gentleman’s agreement” can become problematic and lead to disputes in the long run.

It is important to be specific and detailed in how an agreement will be implemented and how disputes will be resolved.

Risk Consciousness

It is further important to be aware of the risks surrounding a business. Particularly where there have been previous legal disputes in an area of business or where there was previous litigation, it is important to realise that pro-active action and legal advice can avoid litigation in future.

 

Remember that in the event of breach of any legal compliance obligations, ignorance of the law will not be an excuse!