Before you head off and talk to an attorney regarding litigation over a contract dispute, you must make sure to exhaust all avenues of resolution first. Trust when we say you’ll be better off if you can work out your differences with the other party out of court. After all, the majority of disputes happen simply because of a misunderstanding.
There are instances, however, when you can seek the assistance of government agencies. For example, in the case of a dispute with a contractor, you can bring this up with a state or a local agency. Contractors that are licensed with contractor agencies can also rely on these organizations to provide help when a complaint arises.
Here are six other things that you must know about resolving contract disputes:
1) Think long and hard before initiating a legal proceeding against a customer
If the contract dispute involves a customer, you must quickly determine what the root of the matter is. And before you initiate a legal proceeding, you must carefully flesh out the consequences of going this route. You need to ask yourself if you want to continue working with this customer? Or risk damaging the relationship? You also have to consider the likelihood of the customer filing a counter-claim and how, if successful, this would affect your business. In most cases, the customer has around four weeks to file a defense and explain their side of the suit. A court will then examine the claim. When legal proceedings start, settlement offers can be negotiated if you don’t want to go through the motions of the court.
2) Understand where the contract dispute is coming from
When a contract dispute develops, it usually stems from a disagreement involving a condition of the initial agreement between the two parties. Most times, a contract dispute happens because of the following:
- Failure to completely comprehend the contract’s stipulations
- A delay in administering the contract
- A total inability to carry out the contract
- Incomplete or unproven claims by the parties involved
A contract dispute doesn’t usually involve a breach of contract but it can quickly develop into one. This then leads to the termination of the contract or a claim against the surety bonds.
3) You can help reduce the potential for a contract dispute
The power to lessen the possibility of a contract dispute arising is actually in your hands. To do that, you must carefully assess every step of the process, which includes:
- Ironing out a reasonable plan before work is started
- Having a firm grasp of the terms of the contract
- Fleshing out potential landmines before agreeing to the contract
- Working out a schedule that is rational for all parties involved
- Complete documentation of problems that arise during the execution of the contract
- Immediately dealing with problems before they become worse
- Always being transparent through every step of the contract
4) Explore all means of resolution
When a contract dispute arises, you must always consider litigation as a last resort, not the first one. There are several methods that you can try. These are:
- Negotiation: If a dispute arises, you can try talking to the other party first to see if the dispute can be resolved casually.
- Mediation: You can bring in a neutral third party to try and solve the dispute, although the result of this isn’t legally binding
- Arbitration: Arbitration is the forwarding of a debated matter to an impartial person called an arbitrator, for a decision. This is typically an out-of-court method that is done to resolve a dispute. The arbitrator will listen to both sides and will render a decision that favors one party.
- Litigation: This is a process that is turned to when the parties involved cannot resolve the issue using any other method. A trial will render a legally binding decision, although you can still appeal.
5) Pick a suitable method
You need to weigh your options carefully when picking a method to resolve a contract dispute. It will largely depend on your personal needs and the nature of the dispute. If you are unsure, you can always consult with an attorney, like those at Chicago law firm Roth Fioretti, who can guide you in deciding which process will best serve your situation.
6) Check out other methods as well
Here are other dispute resolution processes that you may find useful for your specific situation:
- If you have an issue involving your new car, you can go through automobile arbitration through the Better Business Bureau.
- You can also go to appellate courts, which has settlement conference opportunities.
- You may also go to Small Claims Court where a judge can render a decision regarding your dispute — usually without a lawyer getting involved — if your claim has a value of less than $7,500.
