The main challenge for any business is to be viable and therefore, in most cases, profitable. To achieve this In order to respond to these challenges, companies need to control two aspects of their business: customer satisfaction and reducing the risk of non-payment. These are two fundamental concepts in the management of disputes, which require companies to identify the risks of disputes and then put in place effective strategies to avoid them. Marie-Hélène Gostiaux, a lawyer specialising in business law, explains the best practices to adopt for the early resolution of disputes.
The different types of customer disputes
A company's dispute management policy begins by identifying the most frequent types of dispute. This enables companies to take steps to protect themselves and their customers.
Customer disputes can take different forms:
- imprecise wording or missing information on the order form, quotation, etc. ;
- delivery problems: non-receipt by the customer or late delivery in relation to the dates initially planned ;
- no payment or partial payment by the customer ;
- late payment by the customer;
- product delivered contested by the customer for non-conformity ;
- poor quality/level of service according to the customer.
All these types of dispute have different repercussions for the company. Disputes relating to late or non-payment by customers have a direct and visible impact on the company's cash flow, while any other dispute can have a lasting impact in terms of business. And while not all satisfied customers necessarily make positive comments, any unhappy customer is nevertheless likely to make a negative comment on one channel or another (the company's Google Business page, social network, intermediation platform, etc.). Several customer disputes can therefore very quickly have an impact on a company's image and e-reputation (online reputation).
Four steps to managing a dispute
Disputes have an impact not only on sales, but also on a company's image, especially in the digital age. Old-fashioned word-of-mouth and e-reputation must not be neglected.
Putting in place an effective procedure
- rapid identification of problems (whether it's identifying unpaid bills or collecting customer complaints) via different communication channels);
- a high level of responsiveness on the part of staff in the processing chain, with short turnaround times;
- Transparency that facilitates the sharing of information between employees, but also transparency towards the customer in terms of the follow-up of their order. claim ;
- seamless internal traceability of actions taken ;
- the introduction of a clear escalation procedure, enabling employees to know how much room they have for negotiation or to identify the right contact person to respond to the dispute.
The vast majority of disputes between companies and their customers can be resolved by optimising internal procedures.
Take stock of current procedures
Improving the dispute management process can be an opportunity to carry out an internal audit to identify stumbling blocks and make the necessary corrections:
- revise contractual documents with customers (general terms and conditions, quotations, order forms, etc.);
- but also audit and review contracts with suppliers and commercial partners (for example: consider changing carriers in the event of frequent delays or deliveries in poor condition, formalise its policy of derogatory payment terms where appropriate, review lead times negotiated with each supplier);
- set up or improve a procedure for monitoring payment anomalies. Small and medium-sized businesses can very quickly be affected by disputes that jeopardise their cash flow, if they have not formalised and put in place a strict procedure for monitoring payment anomalies (identifying customers who are frequently late with their payments, those who have a lengthy internal invoice approval and payment circuit, the practice of reminding customers by telephone and then in writing, etc.).
Generally speaking, the more a company implements a continuous improvement process, the greater its internal efficiency. It is this same efficiency that will make up for any shortcomings that lead to customer dissatisfaction or even disputes.
Mistakes to avoid
There are a number of common errors in contractual documents or commercial practices that inevitably lead to litigation. Knowing what these errors are and how to deal with them can limit the risk of litigation. The various departments need to pay particular attention to :
- any clause that may constitute an unfair term in B 2 C General Terms and Conditions of Sale (art. L. 212-1 of the French Consumer Code);
- any clause that may lead to a significant imbalance in B 2 B General Terms and Conditions of Sale (art. 1171 of the French Civil Code and art. L. 442-1 of the French Commercial Code);
- aggressive commercial practices, commercial practices considered unfair, whether they are aimed at consumers, professionals or non-professionals (art. L. 121-1 of the French Consumer Code);
- comply with the rules on telephone canvassing where applicable (art. L. 223-1 et seq. of the French Consumer Code, updated by a law passed in July 2020)[1]) ;
- the presence of compulsory information on B 2 C purchase orders (art. L. 111-1 of the French Consumer Code) and B 2 B purchase orders (art. L. 441-3 et seq. of the French Commercial Code);
- internal processing times for invoices received (reception, verification, validation/rejection) and monitoring the collection of invoices sent;
- legal and contractual payment terms (30 days, 45 days end of month, 60 calendar days, etc.) (art. L. 441-10 to L. 441-16 of the French Commercial Code).
The use of amicable alternative dispute resolution methods
It should be noted that since 1 January 2016, a professional must offer any consumer (i.e. a B 2 C consumer) the possibility of accessing a consumer mediation scheme with a view to the amicable resolution of any dispute (art. L. 612-1 et seq. of the French Consumer Code).[1]). Only the consumer may avail himself of this right and decide to refer the matter to the mediator. The consumer may also choose not to refer the matter to the consumer ombudsman. In this case, if the parties fail to find an amicable solution on their own, the matter may be referred to the courts.
After the first stage, which consists of the parties discussing the subject of the dispute amicably, a large number of professionals send a formal notice if this fails before bringing the matter before the competent court, whether in B2B or B2C.
Alternative dispute resolution
It should be noted that it is still possible at this stage to propose an alternative method.[1] amicable dispute resolution :
- referral to a justice conciliator[1] ;
- the use of the collaborative process[2] ;
- use of the participatory procedure[3] ;
- Referral to the Business Ombudsman in B 2 B[4].
We are deliberately excluding arbitration from our discussion here. Arbitration is an alternative dispute resolution method, but not an amicable one. Arbitration is similar to private justice, where an arbitral tribunal settles a dispute with a decision that can be binding on the parties.
According to some preconceived ideas, these alternative dispute resolution methods are ultimately costly, not very accessible and not very well known, with no guarantee of a convincing result, simply delaying legal action. This is not necessarily the case, especially as the length of legal proceedings is tending to increase, not to mention the possibility of appealing (or appealing to the Supreme Court), and not to mention the risk of insolvency of the convicted party at the end of the proceedings.
Misconceptions
A common misconception is that recourse to an amicable dispute resolution method is costly. However, recourse to a judicial conciliator (conventional or extrajudicial conciliation, before any legal proceedings), a voluntary auxiliary of justice, is possible in particular for neighbourhood problems, consumer disputes, disputes between merchants, disputes relating to rural law or even industrial tribunal cases, and is, contrary to popular belief, free of charge.
An inaccessible mediator
Another common misconception is that the Business Ombudsman is not very accessible. However, any company or professional group, regardless of its size or sector of activity, can apply to the ombudsman. Generally speaking, any contract can also provide for referral to a mediator if there is a dispute over the application of a contractual clause, or relating to the subject matter of a contract or its performance (disputed delivery, infringement of an intellectual property right, breach of confidentiality, etc.).
Unconclusive collaborative law procedures
And what about collaborative law procedures (procedures involving the parties and their lawyers), which are often said to produce few conclusive results. Yet these procedures lead to an agreement in more than 90 % of cases among the professionals who use them, with the satisfaction of putting an end to the dispute under conditions that are acceptable to both parties; unlike legal proceedings, which are often win-lose.
In addition, it should be borne in mind that for legal claims not exceeding a certain amount[1]Under the new procedure, the parties are obliged to demonstrate that they have made an amicable attempt to resolve the dispute before bringing the case before the court, by means of conciliation, mediation or an attempt at a participatory procedure, failing which the case will be inadmissible. Judges will refer parties to mediation when the parties do not prove that they have carried out a specific amicable dispute resolution procedure prior to their referral to the court.
The last tip
Finally, it is a good idea to compare the cost of using a mediator or the collaborative process with the estimated cost of legal proceedings, the duration and outcome of which (possible appeal, risk of insolvency of the other party, etc.) are often more uncertain.
Managing disputes is a real challenge for companies: above all, they must consider them as areas for improvement. Managing them well means learning about the company's inherent processes, as well as identifying and anticipating consumer expectations.
Footnotes
[1] https://www.legifrance.gouv.fr/loda/article_lc/LEGIARTI000038310293/2020-11-01
[1] https://www.service-public.fr/particuliers/vosdroits/F1736
[2] https://www.avocat.fr/processus-collaborative
[3] https://www.avocatparis.org/la-procedure-participative?utm_source=dlvr.it&utm_medium=twitter
[4][4] https://www.economie.gouv.fr/covid19-soutien-entreprises/mediateur-des-entreprises-en-cas-de-conflit
[1] We are deliberately excluding arbitration from our discussion here. Arbitration is an alternative dispute resolution method, but not an amicable one. Arbitration is similar to private justice, where an arbitral tribunal settles a dispute with a decision that can be binding on the parties.
[1] The name and contact details of the consumer ombudsman(s) to which the company reports must be clearly and legibly displayed on the general terms and conditions of sale and order forms, and on the website if the company has one (usually on the page dedicated to the general terms and conditions of sale). https://www.legifrance.gouv.fr/codes/section_lc/LEGITEXT000006069565/LEGISCTA000032223333/#LEGISCTA000032224821
[1] Law no. 2020-901 of 24 July 2020 aimed at regulating telephone canvassing and combating fraudulent calls.
