A contract is a legal document between two or more parties that clearly spells out just what is expected and required of each party in a particular transaction. A contractual dispute occurs when parties have conflicting interpretations over the terms of a contract and one party seeks specific performance or damages or both from the other party. It is usually preferable to resolve the dispute without court action wherever possible.
First, read the contract and other associated documents to clarify the rights and obligations of each party about the issue in question. In many cases, a well-written contract will set out what both parties have agreed and the action required will often be obvious. Also, check your contract for a clause that outlines a process for dealing with disputes between the parties. If the contract or other associated documents do not clarify the issue then:
1. Informal negotiation:
The cheapest and easiest thing to do is often attempting to resolve the dispute through discussion. Try to resolve the problem through talking and informal negotiation with the other party. Often the parties to the contract can negotiate a resolution that is satisfactory to both without the need for formal mediation. Remember to confirm any verbal agreements in writing.
2. Mediation and arbitration:
Mediation or arbitration is another option to resolve the dispute if informal negotiation fails. It is a way of reaching an agreement that is usually cheaper and quicker than using the courts. An independent mediator will assist to negotiate an outcome which meets the interests of both parties. Mediation is not a binding legal process but the resultant agreement can be enforced if necessary. Arbitration is a more involved process similar to court proceedings but much less formal. An arbitrator is an independent third party who will decide the dispute between the parties. The arbitrator considers the evidence of the case presented by both parties and then makes a decision that can be legally enforced.
3. The courts:
You may find it necessary to take the dispute further if other forms of resolution have not been successful. Before you seek a resolution in the courts, carefully consider whether the issue is worth the damage it may cause to the relationship with the other party. Further, this option can be expensive and time consuming. However, if you have a good case and the dispute cannot otherwise be resolved this could be your best option.
There are some documents that you will need to bring when you come to see your lawyer for legal advice in relation to a contractual dispute, including:
- The contract in dispute
- Any documents that are referred to in the contract
- Transaction evidence: bank statements, receipts, invoices
- Correspondence between parties or third parties relating to the contract or the dispute
- Evidence of any damages you claim to have suffered as a result of the dispute.