Course: Legal Aspect of Business

Case Study:

Advanced Electronics Ltd (AEL) is a private limited company which has experienced the following situation and requires appropriate advice to ensure an effective resolution.

AEL has a significant corporate customer, BigByteLTd , which regularly places very large orders with it. However, a problem has started to develop , while AEL provides BigByte with a standard trade credit period of full payment within 30 days , BigByte has got into the habit of paying late(sometimes as late as 90 days).

AEL ‘s concern is that if other trade customers get to know that they are being relaxed about making BigByte pay on time then they may ask for similar extended credit periods>AEL has considered increasing the price of goods sold to BigByte so as to charge the company for the additional credit but fear that any increase in price will merely result in this valued customer going elsewhere.

Advise AEL about alternative forms of dispute resolution (ADR) that could be used to resolve this situation. Specifically identify the advantages ADR may provide compared with traditional court action in relation to business relationships.

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