A dispute occurs when one party acts in a manner which does not accord with the expectations of the other party. The mismatch between expectation and behaviour may come about due to the party’s understanding of what had been agreed; or based on generally accepted standards.
The aggrieved party can choose to ignore the conduct, or can raise it with the other through direct or indirect means. Differences between parties will often be resolved through informal or formal negotiation. If that is unsuccessful, a determination may be required from an independent party (whether an expert, arbitrator or judge).
Resolution of a dispute does not necessarily involve agreement. The complaining party might outline their concerns (for example, that the other party has not met their contractual obligations or respecting their intellectual property rights). The responding party might then offer an explanation, which could be based on a different interpretation of the standards or the reasonable thing to do in the circumstances, the complaining party’s conduct and contribution to the issue, a third party’s role in the problem or something else.
The complaining party may or may not accept the explanation. But it might not be efficient for the complaining party to take further action depending on (amongst other factors):
(a) The significance of the project/relationship;
(b) What the contract (if any) says and the default legal position; and
(c) The extent of the dispute, including the degree of litigation risk around contested/disputed facts.
The advice about picking one’s battles applies to both parties. It might be more efficient for the responding party to concede the point (e.g. to deliver an additional part of the project without charging, or to agree not to do things which are alleged to infringe the complaining party’s intellectual property rights) even if they think they are in the right. There might be many commercial reasons for doing so, such as:
(a) the economics of the dispute, namely the relative cost of rebranding (in the case of an IP dispute) or of undertaking the additional work (dispute about scope) compared to the cost of fighting about it;
(b) not wanting to jeopardise the wider commercial relationship;
(c) reputational concerns;
(d) the business not having sufficient management and/or employee time to focus on responding substantively; or
(e) a lack of funds to pay for lawyers.
It should not be overlooked that most disputes are resolved through alternative means at some stage. Often choices about how and when disputes are resolved will be influenced by commercial considerations which may have little to do with the merits of the legal arguments. But having a good understanding of the legal position if the matter is not resolved will usually be essential to developing a strategy about how to resolve the dispute, and the terms which might be acceptable.