Resolving Commercial Cooperation Disputes: Prevention and Out-of-Court Options

JUDr. Jakub Dohnal, Ph.D., LL.M.
JUDr. Jakub Dohnal, Ph.D., LL.M.
21.4.2026 | ARROWS law firm

Disputes arising from commercial cooperation are among the most common legal issues faced by business owners and managers. Whether it involves unpaid invoices, breaches of contractual obligations, or terms that were never properly agreed, resolving them often takes months and costs significant financial resources. In this article, we will show how to address conflicts arising from commercial cooperation from a legal perspective, what options you have before going to court, and above all how to avoid problems effectively. Our Prague-based attorneys have extensive experience in this area and can assist you both with prevention and with resolving disputes that have already arisen.

The illustrative image shows a lawyer during a consultation regarding a dispute arising from a commercial collaboration.

Quick summary

  • Disputes arising from business cooperation can be resolved out of court (negotiations, mediation, arbitration), which saves time and costs; court proceedings should be a last resort.
  • The most common causes of disputes are unclear contracts, missing documentation, and oral agreements without being properly captured in writing.
  • Proper contract drafting and a timely legal due diligence review of the business partner can prevent a significant portion of problems.
  • When a dispute arises, swift and expert legal intervention plays a crucial role; delays often benefit the other party.
  • Our Prague-based attorneys can represent you in negotiations, mediation, evidence preparation, and court disputes, including enforcement of decisions.

What are the most common types of disputes arising from business cooperation

Disputes arising from business cooperation usually relate to situations where two or more legal entities or individuals fail to fulfil their obligations under a mutual agreement. In the practice of our Prague-based law firm, we most often encounter the following types of conflicts:

  • Unpaid invoices and payment disputes
    One of the most common issues. The seller provided goods or services, but the buyer did not pay the invoice on time or did not pay it at all. The creditor then seeks to recover the debt but is unsure whether they have sufficient documentation. The buyer, in turn, often argues that the goods were defective or that the conditions changed.
  • Breach of contractual obligations
    A business partner undertook to do something and does not do it. For example, they ordered custom software, but the developer stopped the project; or a seller promised delivery at a certain time but fails to deliver, and other companies have meanwhile terminated their contracts with them.
  • Unjustified termination of cooperation
    One party terminates the business relationship without legal grounds and without observing the notice period. The other party then loses income and has no time to find a replacement.
  • Disputes over the scope and quality of services provided
    The service was not provided in accordance with the contract, or there was a disagreement about what the parties meant by “quality performance”.
  • Conflicts due to changed conditions
    One party wants to subsequently change the price, deadlines, or other terms. The other party resists this or demands different concessions.
  • Disputes over unfair competition or breach of trade secrets
    One entrepreneur circumvents their contractual obligations and sells similar products to competitors. The other party objects on the grounds of unethical conduct or a breach of trade secret protection.

All these situations have one thing in common: they escalate if they are handled only through phone calls and emails without a clear legal strategy. If it is already clear that the disputed performance will not be remedied voluntarily, it may be appropriate to involve attorneys experienced in commercial and court disputes. The other party often waits to see whether the problem “resolves itself”, which extends deadlines and worsens the situation.

Related questions about the type and origin of disputes

1. How do I know that the situation will turn into a legal dispute?
The key moment is when the other party stops responding to your requests, or when they clearly refuse to perform what they promised. If you have a written statement showing that the dispute is not accidental but a deliberate breach of an obligation, you should act quickly. Our Prague-based attorneys can advise you on the stage at which it is appropriate to move from negotiations to legal action.

2. Can I resolve a dispute without a lawyer?
In theory yes, but in practice it very often does not pay off in larger disputes. Without legal training, you can easily miss deadlines, justify your position incorrectly, or fail to use all available evidence. The practical difference between when a purchase order is sufficient and when detailed contractual documentation is necessary is also summarised in our update Commercial contract vs. purchase order: When an order is enough and when a company risks a problem. Especially with larger sums, the cost of a lawyer is usually lower than the risk of loss due to incorrect steps.

3. What is the most common mistake entrepreneurs make?
Waiting. Waiting to see whether it “resolves itself”, waiting for three reminders, waiting with legal intervention. While you wait, the other party builds its own evidence, or simply no longer has the money to pay. Early contact with our attorney can prevent weeks of lost time.

Options for resolving disputes out of court

One of the most important insights of modern legal practice is that court is not the only—and often not even the best—way to resolve a dispute. Out-of-court resolution is usually faster, cheaper, and can preserve the business relationship. When setting the approach for negotiations, drafting formal notices, and negotiating a settlement, it has proven effective in practice to use support with contracts and negotiations. In the Czech Republic, the following options are available in particular:

Direct negotiations and written reminders

The simplest and often the least expensive form. You or your attorney formally notify the other party of the breach of obligation and set a reasonable deadline for remedy or payment. The reminder must contain a clear description of the problem, a reference to the contract or agreement, and a specific request (for example, “pay invoice no. 2024-001 in the amount of CZK 150,000 within 14 days”). For the purposes of any future dispute, it is advisable for the reminder to also include notice of the legal consequences of delay.

Many business partners respond to a formal reminder without the matter going any further. A specific procedure on how to properly escalate the matter after non-payment and when court enforcement is already appropriate is also discussed in our update Has your client failed to pay you? How to claim your money in court. They understand it as a signal of serious intent. If the reminder is not sufficiently precise, it may later be interpreted in court proceedings to the detriment of the sender. 

Simply sending a reminder does not, in itself, interrupt or suspend the limitation period. This period—after which the debtor can effectively refuse performance—must always be monitored carefully. Our Prague-based attorneys can prepare a reminder that is legally robust and protects you at the same time.

Mediation

Mediation is structured negotiation in the presence of an impartial and qualified third party – a mediator. The mediator does not decide the parties’ rights or obligations; they only guide them toward finding a solution that both accept.

Advantages:

  • Faster than court proceedings (often resolved within a few weeks or months).
  • Cheaper (the mediator receives a fee, which the parties usually share).
  • The solution is confidential and does not end with a public judgment.
  • If mediation succeeds, the outcome is recorded in a mediation agreement. If this agreement is approved by a Czech court or executed in the form of a notarial deed in the Czech Republic, it has a similar legal effect to a court decision and is enforceable.
  • The business relationship can be preserved, or it can be ended amicably.

Disadvantages:

  • Both parties must be willing to negotiate and seek a compromise.
  • The mediator has no decision-making power; if the parties do not reach an agreement, another solution must be sought.
  • For some business partners, mediation is not motivating – they prefer the pressure of court proceedings.

In the Czech Republic, there are many registered mediators and mediation centers, including attorneys who specialize in mediation in commercial disputes. Our Prague-based attorneys can act as mediators or represent you in mediation to ensure your position is clearly articulated and supported by legal arguments.

Arbitration proceedings (arbitration)

This is a “private court”. The parties agree that their dispute will be resolved by an arbitrator (arbitrators), rather than a state court. The arbitrator issues an arbitral award, which is binding and can be enforced in the same way as a court judgment.

Advantages:

  • Both parties can choose an arbitrator with specific expertise in the relevant area (e.g., an expert for a construction dispute).
  • Proceedings are usually faster than standard court litigation.
  • Proceedings are closed and information is not made public.
  • The option to agree which legal system will govern the matter (important in international disputes).

Disadvantages:

  • There is no standard court procedure that would automatically protect the weaker party; the process is governed by the parties’ agreement and the Czech Arbitration Act (the Act on Arbitration Proceedings and Enforcement of Arbitral Awards).
  • The options for setting aside an arbitral award are limited, and it cannot be “appealed” in the standard way like a court judgment.
  • Both parties must agree to arbitration in writing in advance (usually in an arbitration clause in the contract). Without such an agreement, the dispute cannot be heard in arbitration.

Many international commercial contracts include an arbitration clause. Our Prague-based attorneys have experience in drafting these clauses and conducting arbitration proceedings—especially in cases with an international element, where they work with our international partners.

Court proceedings

A state court is usually the last resort and often the most expensive and slowest route. Court proceedings in commercial disputes typically take 1–3 years at first instance in the Czech Republic, depending on the complexity of the case and the courts’ workload. The judge applies the applicable law and proceeds under the Czech Code of Civil Procedure. An appeal may be filed against the court’s decision.

When to go to court:

  • When you have exhausted out-of-court options and the parties have not reached an agreement.
  • When the other party categorically refuses to negotiate or perform.
  • When the dispute concerns fundamental rights (e.g., invalidity of a contract) where determining the issue requires a binding court decision.

Our Prague-based attorneys have experience representing clients in court disputes at all levels, including enforcement and execution of judgments.

Related questions on out-of-court resolution

1. Should I try mediation first, or go straight to court?
It depends on the situation. If you have a good relationship with your partner and believe it is just a misunderstanding, mediation is ideal. If you know the other party is acting in bad faith and is deliberately unwilling to cooperate, mediation may not be effective and it is more efficient to consider court proceedings. Our Prague-based attorneys can assess what is best in your specific situation.

2. What are the costs of mediation versus court proceedings?
Mediation usually costs from several thousand to tens of thousands of Czech crowns per session or for the entire process (depending on the mediator and complexity). Court litigation can cost you tens to hundreds of thousands of Czech crowns in legal fees, not to mention court fees and the risk that you lose and will have to pay the other side’s costs. Economically, mediation pays off if the matter is resolved amicably.

3. What if the other party refuses mediation?
In the Czech Republic, mediation is not mandatory unless required by law or by the parties’ agreement. The other party may refuse it. In that case, you are left with the choice between further negotiations (often without effect) or court proceedings. A formal legal demand letter from our Prague-based attorneys can sometimes help the other party realize the seriousness of the situation.

Common risks and how our Prague-based law firm helps

Risks and sanctions

How ARROWS helps (office@arws.cz)

Missing or unclear documentation – You do not have signatures on the contract, the terms are unclear, or there are email chains without a clear agreement. In a dispute, it is then not possible to prove unequivocally what the parties promised each other.

Our Prague-based attorneys carry out a legal analysis of existing documents and, in a dispute, build the evidentiary record from emails, SMS messages, invoices, and other materials. They also prepare formal demand letters and written legal positions that protect your standing.

Lack of awareness of limitation and forfeiture periods – You wait too long to file a claim, causing the claim to become time-barred. Or you fail to meet a forfeiture deadline for filing objections and the claim expires.

Our Prague-based attorneys explicitly alert you to legal deadlines and ensure they are met in time. They maintain a timeline and protect you from unpleasant surprises.

Incorrect choice of dispute resolution method – You try court instead of mediation, or vice versa, which costs you time and money.

Our Prague-based law firm first assesses the pros and cons of different routes (negotiation, mediation, arbitration, court) and recommends the most effective option for your situation.

Weak legal argumentation – Your position is factually correct, but you are unable to justify it legally. The other party has a better lawyer and convinces the court.

Our Prague-based attorneys prepare detailed legal opinions citing legislation, relevant case law, and court practice. They present your position in a way that is persuasive to the court or mediator.

Failure to enforce – Even if you win the dispute and have a judgment, the other party does not pay and hides assets. Without knowledge of Czech enforcement rules, you have no chance of recovering the claim.

Our Prague-based law firm provides not only representation in the proceedings, but also subsequent enforcement of the judgment, including enforcement proceedings, insolvency proceedings, and other measures under the Czech legal system.

How to prevent disputes: Legal prevention

In practice, it is always worth investing in prevention—i.e., ensuring that disputes do not recur in the future. This prevention works on three levels:

High-quality contracts and documentation

The simplest and cheapest way to avoid disputes is to have clear, specific, and legally sound contracts. A contract should include:

  • An exact description of the performance or goods. Do not say “software solution”, but describe the functionality: “The system will allow password login, export data in CSV format, and process up to 1,000 transactions per day.”
  • Clear due dates and payment terms. For example: “Invoices are due within 14 days of receipt. After the due date, default interest under the Czech Civil Code and compensation for costs associated with debt recovery will be charged.”
  • Liability for defects. Who is responsible for ensuring that the goods or service are defect-free? For how long? What remedies are available (replacement, refund, discount)?
  • Dispute resolution. Agree in advance how disputes will be resolved—whether by mediation, arbitration, or court proceedings. Include an “arbitration clause” or a “mediation clause” in the contract.
  • Termination of the contract. What is the notice period? What are the grounds for ordinary or extraordinary termination? What happens to unfinished performance?
  • Special terms. If it is important that one party does not work with competitors, the contract may include a so-called “non-compete clause” (subject to statutory limitations, in particular as to duration and reasonable financial compensation).

Our Prague-based attorneys prepare contracts tailored to your industry, your risks, and your position. A contract is not just a “standard template”, but a tool that protects you.

Due diligence on a business partner

Before entering into an important business relationship, it is advisable to “vet” the other party. This means:

  • Verification of legal existence. Is the company actually registered in the Commercial Register? Are the details up to date? Has its registration been cancelled?
  • Financial health. Review publicly available financial statements and reports. Does the company have high debts? Is it in insolvency proceedings or subject to enforcement? This information is available from public registers such as the Insolvency Register or debtor registers.
  • Reputation. Are there complaints, bans, or legal issues involving the company? Non-public databases, such as credit information registers (e.g., SOLUS), can also be used to obtain a broader picture of payment discipline.
  • Recommendations. Ask other companies how their cooperation with the partner went.

Our Prague-based attorneys carry out business partner due diligence covering legal, financial, and reputational aspects. In some cases, this can help you avoid future disputes—and worse, making payments to parties who are unable to pay their debts.

Internal processes and contract compliance

Disputes often arise because you yourself breach your obligations. To prevent this:

  • Clarify internally what is expected from whom. If you are bound by a contract, make sure everyone on the team knows it and understands it.
  • Communicate in writing. Phone calls are forgotten and are difficult to prove. Confirm everything important by email.
  • Keep records of how the cooperation is progressing. Notes from meetings, delivery dates, quality of performance—these all become evidence later.
  • Address small issues proactively. If the partner starts breaching minor obligations, tell them immediately. Do not postpone dealing with it.

How to act at the first signs of a dispute

As soon as a matter starts to become contentious, you should proceed systematically:

  • Consider suspending your own performance. If you are the buyer and have justified doubts about the quality or reliability of the seller, consider suspending further payments (the so-called defence of incomplete performance under Section 1911 of the Czech Civil Code).
  • Write down the factual situation. When did the problem occur? What did the parties promise each other? What did not happen? Gather all relevant documents.
  • Send a formal reminder. It does not have to be long, but it should be in writing and should clearly describe the breach and your claim. You do not need to hire a lawyer immediately, but it is a good idea to have the reminder reviewed. Our Prague-based attorneys can prepare a reminder that is legally correct and effective.
  • Expect a response. Give the other party a reasonable deadline (for example, 14 days) to respond. Often, the matter is resolved without further legal steps.
  • If the matter is not resolved, contact a lawyer. Now is the time. A lawyer will advise you whether to try mediation, go to court, or take other steps to strengthen your position. Timely legal intervention can save you months of time and significant losses.
Related questions on prevention and resolution

1. Is it better to invest in a good contract in advance, or to learn through litigation?
Investing in a good contract always pays off. For example, spending a few thousand to tens of thousands of Czech crowns on preparing a high-quality contract can save you hundreds of thousands of Czech crowns in a future dispute. If you incorporate an arbitration or mediation clause into the contract, you already have an effective route prepared for resolving future conflicts.

2. If I have a dispute, should I hire a lawyer immediately?
For smaller disputes (thousands of Czech crowns), it may not be economically worthwhile. For larger ones, it certainly is. Rule of thumb: if you have a dispute over an amount in the tens of thousands of Czech crowns, you should consult a lawyer. Our Prague-based attorneys also offer “hourly” consultations.

3. What if the other party claims that I am the one who breached the contract?
This is a common dispute dynamic. A lawyer will help you build a defence and demonstrate that you performed your obligations. The burden of proof is often shared—both parties must prove their assertions. Our Prague-based attorneys are also accustomed to situations where their clients are placed in a defensive position.

4. How long does court litigation take?
On average, 1–3 years for first-instance proceedings, and another 1–2 years if an appeal is filed. However, timeframes vary depending on the complexity of the case and the workload of the specific court. Mediation usually takes weeks to months. This is one of the reasons why out-of-court resolution is often preferred.

Final summary

Disputes arising from business cooperation are common, but they do not have to ruin you financially. The right strategy consists of these steps:

1. Prevention: High-quality contracts, good communication, and timely resolution of small issues will prevent matters from ever reaching court.
2. Timely response: When a problem arises, do not hesitate. A formal reminder or legal advice protects you.
3. Choosing the right method: Court is not always the best solution. Mediation, negotiation, and arbitration are often faster and cheaper.
4. Expert legal support: Our Prague-based attorneys can help you at every stage—from drafting a contract, through preparing a legal opinion, to representation in Czech courts or in enforcement of a judgment.

If you have a dispute and want to know the best way forward, or if you would like a high-quality contract prepared that will serve you well in the future, contact our Prague-based attorneys. We will be happy to provide you with a free consultation and propose a solution tailored precisely to your situation.

FAQ - Most common questions about disputes arising from business cooperation

1. Can I represent myself against my business partner without a lawyer?
Legally, yes – the Czech Code of Civil Procedure allows anyone to appear in court on their own behalf. In practice, however, it very rarely pays off, especially in more complex cases. Without legal training, you can easily miss procedural deadlines, fail to substantiate your claims properly, or not make full use of all evidence. Particularly in cases involving the interpretation of contracts or business terms and conditions, the court is somewhat skeptical of arguments without a solid legal basis. Our Prague-based attorneys can conduct the proceedings better and more effectively.

2. What are the most common reasons why business partners do not pay invoices?
In practice, we encounter a range of common arguments: “I didn’t receive the invoice” (often untrue), “The goods were defective” (sometimes justified, but often just an excuse), “We don’t have the money” (a reality for younger businesses or during a crisis), “You harmed us before” (a counterclaim). The reality is that many entrepreneurs use non-payment as a pressure tactic. That is why it is important to be prepared and consistent. Our Prague-based attorneys know these tactics and how to respond to them.

3. What happens if I win the lawsuit but the other party still does not pay?
Then enforcement comes into play. This means you apply to the court for enforcement of the decision or, if you have an enforceable enforcement title, you file a motion for enforcement directly with a court enforcement officer. The enforcement officer can then seize the debtor’s assets (funds in bank accounts, real estate, movable property, receivables). If the debtor has no visible assets, the situation is more complicated, but you are not without options – it is also possible to initiate insolvency proceedings against the debtor. Our Prague-based attorneys assist you with these procedures.

4. What are the most common mistakes that lawyers and their clients make when conducting a dispute?
The main mistakes include: delaying the initiation of proceedings (which can result in the claim becoming time-barred), poor evidence collection (losing documents that would help you), insufficient communication between the lawyer and the client (the lawyer then cannot choose the right arguments), and underestimating procedural deadlines. Our Prague-based attorneys prevent these mistakes by building a structured approach and communicating with the client in a timely manner.

5. How does mediation differ from arbitration?
Mediation is an attempt to reach an agreement with the help of a neutral mediator; the outcome is a mediation agreement drafted by the parties themselves. Arbitration is a “private court” – the arbitrator hears both parties and issues a binding arbitral award. Mediation is therefore more flexible and focused on preserving the relationship, while arbitration is authoritative and based on the application of law. Our Prague-based attorneys can help with both.

6. What is the average cost of a lawyer for handling a commercial dispute?
Fees vary, but the usual model is an hourly rate (depending on the lawyer’s experience, the complexity of the case, and the region, it can range from CZK 500 to CZK 5,000 per hour) or a flat fee for specific tasks (e.g., several thousand CZK for preparing a formal demand letter, tens of thousands for representation in mediation). Some firms also offer a “No Win, No Fee” model (a success fee) – if you lose, you do not pay the lawyer’s fee (more common in certain types of disputes; less common in commercial disputes, but possible as an add-on to the basic fee). Our Prague-based attorneys can offer various cooperation models and are familiar with market rates.

Notice: The information contained in this article is of a general informational nature only and is intended to provide basic guidance on the topic based on the legal situation as of 2026. Although we take the utmost care to ensure accuracy, legal regulations and their interpretation evolve over time. We are ARROWS advokátní kancelář, an entity registered with the Czech Bar Association (our supervisory authority), and for maximum client protection we are insured for professional liability with a limit of CZK 400,000,000. To verify the current wording of regulations and their application to your specific situation, it is necessary to contact ARROWS advokátní kancelář directly (office@arws.cz). We accept no liability for any damages arising from the independent use of the information in this article without prior individual legal consultation.

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