How Do You Resolve a Contract Dispute?

Before you work with an attorney to undergo litigation regarding a contract dispute, make sure you consider all other methods. If you can work out any differences with the other party outside of court, that's an easier outcome. Many disputes occur simply due to misunderstandings.

In certain instances, government agencies can help. If you have a contract dispute involving a contractor, talk with a state or local agency. Contractors that hold licensure with contractor agencies can rely on the agencies to assist with complaints.

Another way to deal with contract disputes is through mediation, which helps people to understand their differences. Mediators don't declare winners, as there are no winners or losers. The third-party mediator then helps each party to come to a resolution, although the result isn't binding.

Binding arbitration is different from meditation because it remains binding due to an arbitrator making a legally binding decision. Afterward, no party can appeal. This process is similar to litigation but is less formal and oftentimes faster.

How to Resolve a Contract Dispute with Customers

If you have a contract dispute involving a customer, determine what the cause is. Before beginning legal proceedings, think about the consequences. Some questions to ponder include the following:

  • Do you want to continue a relationship with the customer? If so, consider whether the outcome will destroy the relationship.
  • Will your customer make a counter-claim? Consider the likelihood of the claim being successful and how it would impact your business.

In many cases, your customer has approximately four weeks to file a defense explaining the dispute and then the court will review the claim. When legal proceedings begin, settlement offers can start if you want to avoid going through the courts.

Why Do Construction Disputes Arise?

When construction disputes occur, they're typically due to disagreements about a contract between the two parties. Disputes might arise due to the following:

  • A failure to understand the contract's conditions.
  • Contract delays.
  • Unable to administer the contract.
  • Incomplete or unsubstantiated claims by the involved parties.

Although disputes don't involve a breach of contract, they may turn into one. This could lead to a contract termination or claim against surety bonds held by the contractor.

Reduce the Possibility of Disputes Arising

To reduce the possibility of disputes occurring, take a look at the construction process at every stage. Resolution begins with the construction contract and examining dispute clauses. Other preventative measures include the following:

  • Conduct significant planning before you start work.
  • Read the contract carefully.
  • Negotiate potentially problematic clauses.
  • Do due diligence for pre-construction work.
  • Determine if schedules are realistic.
  • Document issues that occur during the execution.
  • Deal immediately with problems.
  • Identify potential risks.
  • Have a greater transparency to everyone involved.

Construction Dispute Resolution Methods

When drafting a construction contract, there are several resolution methods available. They include:

  • Negotiation. This clause includes an agreement that if a dispute arises, the parties will attempt to reach a resolution first.
  • Mediation. This clause uses a neutral third party to resolve the dispute, but this clause isn't legally binding.
  • Expert determination. As an alternative to mediation, this clause resolves disputes of a specialist nature, but it's also not legally enforced.
  • Adjudication. This clause also involves a neutral third party, but the adjudicator gives a decision.
  • Arbitration. This clause also involves a neutral third party, where an arbitrator has experience to decide the case. The arbitrator looks at documents and facts and makes a legally binding decision favoring one side.
  • Litigation. This clause is used when the parties cannot resolve the issue any other way. Litigation involves a trial and is legally binding, although the parties can appeal the decision.

What Does It Mean to be Licensed?

Although licensure varies from one profession and location to another, there are certain professions that have strict licensing requirements. Plumbers and electricians are two such professions. General home contractors typically have fewer licensing requirements.

Contractors who hold a license typically have the following:

  • A specific level of training or education.
  • A minimum level of experience.
  • Successfully completed an examination.
  • Kept current with code changes.

Although there is no guarantee that the project turns out successfully, having a licensed professional increases the probability. In addition, licenses usually refer to professional competence and not relating the general business practices.

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