Contract Disputes
Until recently, most contract disputes ended up in arbitration or litigation. Unfortunately, these less than perfect processes resulted in owners and contractors walking away from the situation dissatisfied with the outcome.
Contract disputes arise from the breach of contractual terms defining the rights and responsibilities of the parties. Sometimes one of the parties fails to act accordingly, constituting a breach of contract.
Breach of contract disrupts the balance in everyday life and business relationships because most of our interactions with other people or business entities operate through agreements.
With contracts, people define rights and responsibilities between business partners, employees, and clients. Parties agree to take specific action or refrain from performing an activity. As binding agreements, contracts are indispensable for organizing social and business activities.
Despite clearly defining the contract terms, one of the parties can deliver goods of inferior quality (including goods unfit for the purpose) or fail to supply them on time. Contrarily, the other party may fail to pay the price on time. In each case, we see an example of a contract breach.
Any breach of contract falls into one out of two categories: non-material and material breaches.
A non-material breach occurs if a violation of terms does not compromise the contract integrity. The parties can continue their relationship after correcting the issues in question. On the other hand, material breach of contract is irreparable, giving the opposing party to claim damages from the defendant.
Resolving Contract Disputes in Litigation
Dealing with disputes, many people and business entities resort to court litigation. However, proving breach of contract claims in court is associated with numerous difficulties. Due to rigid litigation rules, the process can last for years. Apart from that, the expenses add up with each stage, resulting in an ineffective and costly procedure.
If you are involved in a contract dispute, proving that the contract is a valid agreement is the first step. Next, as a plaintiff, you must demonstrate that the defendant failed to comply with contractual terms. Finally, you have to show that such failure resulted in monetary damages.
Mediating Contract Disputes
Business relationships and the dynamics of everyday life require dispute resolution to be quick and effective. More importantly, disputed contract parties demand confidentiality and a non-adversarial approach to their conflict resolution. No dispute resolution method can meet those demands as successfully as mediation. As an out-of-court dispute resolution tool, mediation proves to be an invaluable method for resolving contracts in a mutually beneficial way.
Mediation, something that is just now growing in popularity for dealing with contract disputes, puts the disputants in control of the process, the costs, and the outcome. Most contract dispute cases where parties attempt mediation – either voluntarily or by court order – are resolved successfully.
In mediation, the third neutral person conducts the process in a friendly and peaceful atmosphere. The parties choose the mediator (usually a retired judge or another professional experienced in contract disputes) by signing the mediation agreement. The so-called confidentiality clause is an integral part of the agreement. That means that nobody, including parties, attorneys, and the mediator, can reveal the information discussed during the mediation process. Likewise, neither the mediator nor the parties can disclose confidential information in future litigation.
Unlike a state-appointed judge, who has the authority to issue a binding decision, the mediator facilitates the negotiations between the parties. They do not have the power to render a decision resolving a dispute.
The mediation process is not strict as litigation, but typical phases include an introduction, opening statements, and private and joint sessions. After introducing themselves, the mediator conducts private sessions with each party. During the so-called caucuses, the mediator discusses the matter separately, trying to estimate each party’s arguments and the possibility of settling. In a joint session, the disputed parties gather to negotiate the contested issues, bringing offers and counteroffers. The role of the mediator is to facilitate negotiations without proposing or mandating a specific solution.
Mediation is helpful in contract disputes because it makes it easier to deal with complex and emotional details. The process allows those involved to explore their options and determine how to end the conflict, crafting the ideal outcome. Resolutions that are not an option in the courtroom or arbitration are on the table when parties decide to mediate the dispute. And mediation has the added benefit of potentially preserving mutually beneficial business relationships.
Understanding the mediation is possible only after considering its reconciliatory aspect. Mediation does not only resolves a dispute bringing just compensation. It enables further cooperation between contract parties.
The parties who negotiate the matter successfully sign an agreement resolving their dispute.
If you are involved in a contract dispute and hoping to avoid litigation, Lawrence Gordon can help. Lawrence knows how difficult it can be to resolve contract disputes and that in most cases when litigation is involved, both parties walk away unhappy with the outcome. His forty years of experience negotiating settlements means he can help you resolve conflicts most efficiently and effectively and potentially save mutually beneficial relationships.
For more information or to schedule a consultation with Lawrence, contact him at 561-655-4065 or email him at [email protected].
