Litigation Can Put You Out Of Business In A Heartbeat

Many companies underestimate the possible gravity of getting into litigious situations.

Lawsuits, especially in situations where one does not have strong legal legs to stand on, are

possible minefields for disaster. Many organisations work hard to grow the top line only

to have a lawsuit siphon off the money. It is like having a purse with holes in it.

in spite of of whether you win or lose the lawsuit, the ultimate winner is the lawyer.

Unfortunately if your company happens to be the loser, the extent of the costs and

damages could possibly derail your business overnight.

Many contractors in Singapore also got themselves into trouble by taking on contracts

indiscriminately despite poor margins, unrealistic deadlines and limitations. ultimately,

they were held liable for enormous liquidated damages for delays in completion and

consequential damages resulting from their work. The risks involved were

disproportionate to the returns from such jobs. Some of these sub-contractors were

hopeful that they could make money from variation orders or additional scope of work

not stipulated in the original contract. However, these variation orders were not properly

signed off before the additional work was executed as a consequence some main contractors

took advantage not to pay in times of contractual disputes. Also, projects often get

delayed for many uncontrollable reasons and that these sub-contractors had to continue

with counter claims and back charges from the main contractors.

In many situations, these sub-contractors could not provide a protracted litigation battle and had to settle out of court with the main contractors for an unfavourable settlement. Many of these sub-contractors

would be been spared the headaches if they had avoided taking on such onerous contracts.

Be cautious of the ramifications of litigation especially in the case of China. An effective

strategy in China method understanding the myriads of legal and regulatory issues at the

state and provincial level, the city or already local level. Conflict and contract argument

resolution, remedies and legal recourse considerably differ from vicinity to vicinity. This

can be a minefield by which to navigate. However, much of the headaches can be

minimised if one clearly understands the legal issues involved at the outset. It is

important to understand these issues at the start.

In China, the government has great involvement with the business sector. For example for state-owned enterprises (SOEs), it is difficult to trace between public and private business ownership. consequently, it is important to understand the legalities before entering into partnership with the SOE.

With the entry into World Trade Organisation, China has progressively removed many

artificial barriers in the business sector. However, China remains basically a closed

market and firmly managed by the government. It is a prerequisite to understand the

rules and regulations of your industry. The law will always catch up with you if there is

any non-compliance whether deliberate or by sheer ignorance. Your disgruntled

staff or competitors will report to the authority on your non-compliance as reporting

against one another is a shared communist trait.

Litigation once nearly destroyed America’s small aircraft industry. It also threatened to

topple powerful brokerage firms because of the conduct of their analysts. The Catholic

Church is also unprotected to an onslaught of litigation due to the spates of alleged abuses

by its priesthood. The other typical example is Arthur Anderson. The suspicion of

improprieties and litigations caused enormous customer defections.

If you reckon that your company can assistance economically by ignoring a law, you may be

kidding yourself. Be additional careful. If non-compliance results in safety hazards for

employees or the public in general, do not break the law, it is not worth it.

Also, during hard times when you cannot repay your creditors, try convincing them to

extend the payment period instead of sue you in court. Most creditors such as the edges

would prefer that the matter be settled amicably as it is bad publicity for all parties

concerned, both the plaintiff and the defendant.

consequently it always pays to play by the law in the long term. If you are a boxer, you do

not chew up the ears of your opponents. You will be barred from future matches or

worse nevertheless be put in jail like Mike Tyson. Your reputation will also go down the tubes.

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