In the world of business, needing to deal with a contract dispute is a common occurrence. It would be nice if there were never disputes when an agreement was entered into, but that's simply not the case. Reasons for disputes include financial issues, delays, and other unexpected events that prevent a contract from being successfully carried out. When there is any disagreement over part of a contract, this is considered a contract dispute. For a contract to be considered valid there has to be a "meeting of the minds." This means everyone in both parties should have a firm understanding of each contract term and mutually agree to the terms. 

If there is no mutual agreement, the contract won't be considered valid and can be contested in court. Contract disputes are often known as a breach of contract, which means one of the parties didn't perform a promise or duty that was agreed to in the original contract.

Breach of Contract

There are two types of contract breaches, known as a minor breach and a material breach. A minor breach is when the breach is small and doesn't disturb the main part of the contract. Both parties still need to carry out the rest of the contract, but the non-breaching party is the one who can sue the breaching party for damages.

A material breach is when the non-breaching party is not required to perform their part of the contract and can sue the party who is breaching for any damages they caused. The breach is so deep and crucial that it makes the purpose of the contract obsolete. When a breach of contract happens, both parties might want to have the contract enforced on their own terms. They may also want to recoup any financial harm that was caused by the breach. If informal attempts at a resolution fail, a lawsuit is the next step.

If the number is below a particular dollar figure (usually less than $7,500), the parties can go to small claims court to resolve an issue. However, formal and court lawsuits aren't the only solution for companies and individuals involved in a contract dispute. Parties can ask a mediator to look over the contract dispute or can agree on binding arbitration. These are known as alternative dispute resolutions. If someone breaches a contract, the opposite party is entitled to a remedy or relief, according to the law. The main remedies available for a breach of contract include:

  • Specific performance
  • Damages
  • Cancellation and restitution

Damage is some kind of payment and is the usual remedy when a breach of contract occurs. There are many different types of damages. One of them is compensatory damages, which puts the non-breaching party in the position where they would be if the contract had not been breached. Punitive damages are a type of payment the breaching party is required to make to ensure the non-breaching party is fully compensated. Their purpose is to punish the party who is in the wrong.

Nominal damages are a type of token damage that is rewarded when a breach happens, but there was no money loss that occurred. Liquidated damages are particular damages that were identified previously by both parties in the contract, in case the contract was breached. This should be a reasonable estimate of damages that may occur from a breach.

It can be an involved and lengthy process for contract formation. There are many steps that need to be taken during this process. In order for a contract to be considered valid, there must be an offer, the other party must accept the offer, and there must be a type of payment or consideration for the services or goods. Contract disputes can happen during any of these stages. Some types of disputes may come from having problems while creating and reviewing the contract, errors and mistakes found in the contract, or disagreements over a technical term.

There can also be acceptance or offer disputes, coercion, and fraud, where one person is tricked or forced into signing the contract. Even when a contract is formed correctly, there can still be disputes.

If you need help with a contract dispute, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.