Two of your friends are fighting with each other. What could you say to help them? Why don't you sit down with each other? Each person can hear the other one's side of the story.
1. Why don't you sit down with each other?
(What is the action of each person? Are they required to sit on a chair together?)
2. Each person can hear the other one's side of the story.
(Is this sentence grammatical?)
For #1, the two people would sit on chairs, probably facing each other, maybe with a table in between them.
For #2, the sentence would be better if you omit "one's" and use "other's" before "side"