Given the nature and complexity of commercial activities, it is inevitable that disputes arise especially where transactions involve large amounts of money. Disputes use up valuable resources in terms of money, management time and loss of trade. They may also damage trading reputations and relationships. It is therefore essential, in the interests of justice and the efficient use of economic resources, that machinery be provided for their speedy resolution.[1] Business will normally seek to minimize the potential for conflict by taking steps to prevent disputes arising and establishing procedures for speedily resolving any which do arise. No matter how much care is taken in the drafting of contracts, however, disputes will still inevitably arise, as is shown by the volume of litigation generated by the commodity trades, shipping industry, and the rest of the commercial transactions, despite the widespread use of carefully drafted and well-known standard form contracts. In general, it may be said that disputes are likely to arise where one party seeks to act opportunistically, by taking advantage of a change in circumstances or uncertainty in the agreement or in the law. Even the best drafted contract cannot provide with absolute certainty for every eventuality. There must therefore be mechanisms for resolving those disputes. The simplest, and most beneficial, is for the parties to seek themselves to resolve the dispute by negotiation, and most disputes are infact settled by negotiation, generally without the intervention of lawyers[2]. Failing settlement, however, they may resort to litigation, to formal arbitration or to one of the many developing alternative dispute resolution (ADR) mechanisms. [1] Robert Bradgate,. Commercial Law London,. Butterworths, Publishers, 2000 P.867. [2] See Beale and Dugdale, “Contracts Between Businessmen” (1975) 2 BJLS 45.cf Deakin, Lane and Wilkinson, “Contract Law, Trust Relations and incentives for co-operation: A Comparative Study” in Deakin and Michie (eds) Contracts, Co-operation and Competition: Studies in Economics and Management (1997), who found a relatively high likelihood that small English firms in their survey would resort to litigation, especially to recover unpaid debts
