How Loyakk Reins in Commercial Contract Disputes with Blockchain
Think about this: Commercial disputes cost businesses $870 billion per year globally, according to a US Chamber of Commerce study. In America alone, direct costs of commercial claims resolved through litigation represent 1.66% of GDP:
If you’re thinking that this is a lot of unnecessary waste, you’re right. Thankfully, there appears to be an answer to the problem: Blockchain technology.
Here’s how the right blockchain solution can rein in commercial contract disputes — and enable businesses to hold on to resources they need to run their company and serve their customers.
What’s causing commercial disputes?
Commercial disputes happen across a wide range of industries — though they’re more prevalent in certain sectors.
For instance, commercial disputes related to mining, gas, and oil have long made up a large chunk of cases, with other sectors such as transportation, pharma/biotech, and entertainment seeing increasing caseloads.
From urban development to consumer goods to insurance, no industry or company is immune to commercial disputes — and the heavy costs that come with them.
But what’s causing these disputes in the first place?
Generally, commercial contract disputes can be attributed to a breach of contract, such as missed deadlines, cost overruns, and issues with traceability of the actual work output versus what was specified in the contract.
Commercial claims stemming from shareholder action and problems related to mergers and acquisitions, intellectual property, and antitrust/competition also commonly arise.
A better way to solve commercial contract disputes
One of the main reasons commercial contract disputes occur is due to the current centralized nature of business networks.
This centralization has not only created a system that lacks visibility, but also one that’s inefficient and insecure. Data leakages, system hacking, a lack of transparency, and an inefficient process for handling enterprise data have the following consequences:
- Consistent revenue loss
- Increased operational costs
- Numerous commercial disputes
Fortunately, it no longer has to be this way. With the emergence of blockchain technology, the right solution is being built as you read this.
How a decentralized blockchain helps resolve disputes
As Leslie Dukker Doty, executive vice president of consumer marketing at Time, Inc, notes, “Whether an organization offers consumer services, or has business-to-business offerings, it requires smooth, secure and auditable coordination across a network of partners to deliver those services.”
Currently, a lot of friction exists in these interactions, both within companies and between companies and their partners and clients.
To verify that all the conditions of a contract are being met, manual processes, like an email or phone call, are needed. If there’s a problem, litigation is needed. This utilizes way too many resources.
The blockchain can simplify these processes by eliminating the need for outdated manual tasks. By using a distributed ledger that tracks the entire life of a transaction and the provenance of products and services delivered, a blockchain solution can both streamline and automate the complex exchange of information and orchestration of workflows.
Furthermore, even disputes can be resolved on the blockchain through the power of self-executing smart contracts, which Vitalik Buterin describes as programs that run code that “automatically validates a condition” and then “automatically determines whether the asset should go to one person or back to the other person.” Smart contracts enable agreements to be implemented, executed, and reported in an error-free manner.
With smart contracts, parties are bound by code that is designed to enforce pre-established rules and conditions. If one side doesn’t fulfill its duties or acts maliciously, the smart contract ensures they’re not properly rewarded and/or punished accordingly. Thanks to enhanced visibility and efficiency in the system, dispute resolutions on a blockchain enterprise network can achieve greater accuracy at a fraction of the time and costs it currently takes.
For many businesses, this is why a blockchain-backed enterprise network solution makes sense. It’s the best way to get back a large portion the billions of dollars lost to contract disputes.
Powering secure enterprise business networks with the blockchain
Companies are increasingly distributed and decentralized. They have hundreds and sometimes thousands of partners, distributors, channels, contractors, and other entities around the globe.
As businesses are getting complex work done, there’s an acute need to ensure that this work is governed by smart contracts. Every relevant transaction or interaction must be recorded and tracked in a verifiable and immutable manner, and in the context of enterprise relationship and business contexts.
This is why a blockchain solution holds so much promise. And this is where Loyakk enters the picture. Their decentralized platform does precisely what companies need to successfully rein in commercial disputes.
Loyakk has created a blockchain-enabled business relationship platform to build the solution companies need to minimize and resolve disputes in the most efficient manner possible. It’s called the Loyakk Vega Business Relationship Platform, and it’s the first enterprise blockchain solution of its kind for decentralized business networks.
Highlighting the potential of the blockchain-powered business network, Salim Ali, CEO of Loyakk, states, “Sharing confidential business and sales data with the network is a $100B problem that needs a solution. Our team’s DNA is rooted in enterprise applications and we are leveraging blockchain capabilities to enable business to share and track critical business data with its partners, customers, vendors, channel, and suppliers.”
It’s time to put an end to the waste and inefficiency
Remember: commercial disputes cost businesses $870 billion per year globally. With blockchain solutions like the one Loyakk is developing, those costs will steadily fall. Eventually, they may disappear entirely.
The future of commercial disputes will be a much fairer, more efficient, and safer one with the solution by Loyakk.