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Home / Articles / Legal / Law of Contracts – Part 26

Law of Contracts – Part 26

The Role of Service Level Agreements. By Adv Louis Nel.

(For a summary on this series see end of article).

Alternative Dispute Resolutions (Cont’d)

As mentioned at the end of my article on standard terms and conditions last month (Part 25 – JAN 2017), I’ll take a brief look at other clauses that could provide for alternative dispute resolution (‘ADR’) before we focus on arbitration and mediation. So here it is!

The best-known form of resolving a dispute is usually initiated by the brave words ‘I’ll see you in court’ or ‘Speak my lawyer’. If you choose that route, make sure that you have DEEP pockets, do not litigate on matters of principal and remember, there is no such thing as ‘A WATERTIGHT CASE’! Whilst it is your democratic and constitutional right to pursue your interests in the legal forum of your choice (i.e. Small Claims Court, Labour Court, Magistrates Court, High Court, Supreme Court of Appeal or Constitutional Court), litigation should be kept in reserve for as few applications as possible and ONLY once you’ve exhausted ALL the alternatives. There is however no denying that in certain circumstances a summons is the correct and most effective manner in which to protect or recover your rights and interests.

One of the key benefits of ADR is the issue of privacy – the complete lack thereof was illustrated in the case of City of Cape Town v SANRAL in 2015 – prior to this case the general public (and therefore the press!) only had access to documents filed in court proceedings once the matter has been called in open court. However, the Supreme Court of Appeal (‘SCA’) ruled in this case that access is allowed as soon as the documents are filed/lodged and such access is allowed to ‘any person’ and no ‘direct legal interest’ is required. Clearly, this can have devastating consequences for your brand and that should be a key consideration: disputes are often more about brand management than about who is right or wrong!

So, now that you’ve made the wise decision that your welfare is more important than that of the legal fraternity, let’s look at your remaining options: We’ve discussed arbitration and mediation. As indicated, the latter is a form of ADR (‘Alternative Dispute Resolution’). What are the others?

  • There is valuation and certification: The valuer or certifier makes a ruling based on his own expert knowledge.
  • Then there is negotiation and conciliation: The parties can resort to negotiation and conciliation with or without the assistance of a third party.
  • Thirdly there is mediation.
  • Lastly, there is arbitration.

As indicated in Part 25, the outcome of mediation is not binding on the parties – the mediator expresses an opinion as to what he believes to be a fair and reasonable resolution to the problem. However, the parties can agree to record the finding of the mediator in an agreement which, once accepted and signed by both parties, will be binding and enforceable. The parties can select, failing a satisfactory resolution of their problem via mediation, to proceed to arbitration.

The outcome of arbitration, on the other hand, is binding. Arbitration becomes the method of resolving a dispute if parties to the dispute choose that method of problem-solving at the time, or if it is a clause in an agreement governing the relationship that gave rise to the dispute. The wording of such a clause is of crucial importance and, if poorly worded, it can give rise to many problems e.g. the appointment of the arbitrator, time limits and whether section 20 of the Arbitration Act applies.
Next month (Part 27), I will look at other alternatives and the advantages and disadvantages of Arbitration and Mediation.

Disclaimer: This article is intended to provide a brief overview of legal matters pertaining to the adventure tourism industry and is not intended as legal advice. © Adv Louis Nel, ‘Louis The Lawyer’, February 2017.

SUMMARY

  • In Part 1 (Aug 2014), I categorised risk into five categories, namely; 1. PEOPLE, 2. MONEY, 3. LAW, 4. SERVICE and 5. ECOLOGY. In this series, I deal with the risk profile of each, i.e. broadly speaking the areas of risk that any business is exposed to can been allocated under these five categories.
  • Part 2, (Sep 2014) covered the category of ‘People’ under four sub-categories: Staff (discussed in Part 1); Third party service providers (‘TPSP’); and Business Associates.
  • Part 3 (Oct 2014), continued with ‘PEOPLE’ as Customers.
  • Part 4 (Nov 2014), started the discussion on the 2nd category, namely ‘MONEY’ in terms of CASH and CHEQUES.
  • Part 5 (Dec 2014), looked at CREDIT and CREDIT CARDS.
  • Part 6 (Jan 2015), looked at LAW and CONTRACTS, with an introduction and Requisite #1: Offer & Acceptance.
  • Part 7 (Feb 2015), continued with Requisite #1 covering telephone enquiries, e-mails, websites and advertising.
  • Part 8 (Mar 2015), covered Requisites #2: Legally Binding Obligation, and #3: Consensus in contracts.
  • Part 9 (Apr 2015), covered Requisite #4: Performance Must Be Possible.
  • Part 10 (May 2015), covered Requisites #5 & 6: Performance Must Be Permissible, and Capacity of the Contracting Parties.
  • Part 11 (Jun 2015), continued with Requisites #6: Capacity of the Contracting Parties.
  • Part 12 (July 2015), covered Requisite #7” Negotiating a Contract.
  • Part 13 (Aug 2015), covered Requisite #8 Drafting a Contract.
  • Part 14 (Oct 2015), covered Requisite #9 Contract Management.
  • Part 15 (Nov 2015), covered Requisite #10 Enforcing Your Contract – Part 1.
  • Part 16 (Dec 2015), Requisite #10 Enforcing Your Contract: Requisites (continued-1)
  • Part 17 (Jan 2016), Requisite #10 Enforcing Your Contract: Requisites (continued-2)
  • Part 18 (May 2016), Requisite #10 Enforcing Your Contract: Requisites (continued-3)
  • Part 19 (Jun 2016), Requisite #10 Enforcing Your Contract: Requisites (continued-4).
  • Part 20 (Jul 2016), Requisite #10 Enforcing Your Contract: Requisites (continued-5).
  • Part 21 (Sep 2016), Enforcing a Contract: the 8th & final question.
  • Part 22 (Oct 2016), Enforcing a Contract: Step 3 – Impact on your Business.
  • Part 23 (Nov 2016) Enforcing a Contract: Step 4 – Who to Consult.
  • Part 24 (Dec 2016), The Role of SLAs – T&Cs – Benefits & Decisions.
  • Part 25 (Jan 2017), The Role of SLAs – T&Cs – Alternative Dispute Resolutions.