| Many companies underestimate the potential gravity | | | | isimportant to understand these issues at the start. |
| of getting into litigious situations. | | | | In China, the government has great involvement with |
| Lawsuits, especially in cases where one does not | | | | the business sector. For example for state-owned |
| have strong legal legs to stand on, arepotential | | | | enterprises (SOEs), it is difficult to delineate between |
| minefields for disaster. Many organisations work hard | | | | public and private business ownership. Therefore, it is |
| to grow the top line onlyto have a lawsuit siphon off | | | | important to understand the legalities before entering |
| the money. It is like having a purse with holes in it. | | | | into partnership with the SOE. |
| Regardless of whether you win or lose the lawsuit, | | | | With the entry into World Trade Organisation, China |
| the ultimate winner is the lawyer. | | | | has progressively removed manyartificial barriers in |
| Unfortunately if your company happens to be the | | | | the business sector. However, China remains basically |
| loser, the magnitude of the costs anddamages could | | | | a closedmarket and tightly managed by the |
| possibly derail your business overnight. | | | | government. It is a prerequisite to understand |
| Many contractors in Singapore also got themselves | | | | therules and regulations of your industry. The law will |
| into trouble by taking on contractsindiscriminately | | | | always catch up with you if there isany |
| despite poor margins, unrealistic deadlines and liabilities. | | | | non-compliance whether deliberate or through sheer |
| Eventually,they were held liable for massive liquidated | | | | ignorance. Your disgruntledstaff or competitors will |
| damages for delays in completion andconsequential | | | | report to the authority on your non-compliance as |
| damages resulting from their work. The risks involved | | | | reportingagainst one another is a common communist |
| weredisproportionate to the returns from such jobs. | | | | trait. |
| Some of these sub-contractors werehopeful that | | | | Litigation once nearly destroyed America's small |
| they could make money from variation orders or | | | | aircraft industry. It also threatened totopple powerful |
| additional scope of worknot stipulated in the original | | | | brokerage firms because of the conduct of their |
| contract. However, these variation orders were not | | | | analysts. The Catholic |
| properlysigned off before the additional work was | | | | Church is also vulnerable to an onslaught of litigation |
| executed as a result some main contractorstook | | | | due to the spates of alleged abusesby its priesthood. |
| advantage not to pay in times of contractual | | | | The other classic example is Arthur Anderson. The |
| disputes. Also, projects often getdelayed for many | | | | suspicion ofimproprieties and litigations caused |
| uncontrollable reasons and that these sub-contractors | | | | massive customer defections. |
| had to contendwith counter claims and back charges | | | | If you reckon that your company can benefit |
| from the main contractors. | | | | economically by ignoring a law, you may bekidding |
| In many cases, these sub-contractors could not | | | | yourself. Be extra careful. If non-compliance results in |
| afford a protracted litigation battle and had to settle | | | | safety hazards foremployees or the public in general, |
| out of court with the main contractors for an | | | | do not break the law, it is not worth it. |
| unfavourable settlement. Many of these | | | | Also, during hard times when you cannot repay your |
| sub-contractorswould be been spared the headaches | | | | creditors, try convincing them toextend the payment |
| if they had avoided taking on such onerous contracts. | | | | period rather than sue you in court. Most creditors |
| Be wary of the ramifications of litigation especially in | | | | such as the bankswould prefer that the matter be |
| the case of China. An effectivestrategy in China | | | | settled amicably as it is bad publicity for all |
| means understanding the myriads of legal and | | | | partiesconcerned, both the plaintiff and the |
| regulatory issues at thestate and provincial level, the | | | | defendant. |
| city or even local level. Conflict and contract | | | | Therefore it always pays to play by the law in the |
| disputeresolution, remedies and legal recourse | | | | long term. If you are a boxer, you donot chew up |
| significantly differ from region to region. Thiscan be a | | | | the ears of your opponents. You will be barred from |
| minefield through which to navigate. However, much | | | | future matches orworse still be put in jail like Mike |
| of the headaches can beminimised if one clearly | | | | Tyson. Your reputation will also go down the tubes. |
| understands the legal issues involved at the outset. It | | | | |