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A complete guide to resolving a contract dispute
Commercial disputes relating to contracts are nearly always time-consuming and distract and take up time that could otherwise be spent on essential activities of the business. Seeking legal advice initially and being aware of your options can make this process much less of a problem.
We explain here why having dispute resolution clauses in place defining your options for resolving a dispute should one arise and also how to prevent future disputes.
Click on a link to that section:
The causes of common types of commercial contract disputes.
More about the importance of dispute resolution clauses in a contract.
The benefits of using alternative dispute resolution to resolve a dispute.
Situations when litigation may be a necessary option.
How you can prevent contract disputes from occurring in the future
How Giambrone & Partners can assist you in resolving your dispute.
Types of commercial contract disputes
All businesses require commercial contracts in order to operate effectively. Contracts document the agreement you make with another party and outline the services and terms of business each party expects to receive, enabling each party to have a clear understanding of what service they will provide or receive.
Unfortunately, disagreements can arise when one business believes, rightly or wrongly, that a contract has been breached. A breach of contract occurs when one party breaks the terms outlined in a legal agreement. There are several types of contract breaches, including minor and material breaches. In such circumstances, it is vital that these issues are dealt with as efficiently as possible to ensure minimal disruption to the business and ensure the best outcome for you.
Common types of commercial contract disputes include:
Indemnity disputes. An indemnity agreement is a contract or clause in a contract that states that one party will provide financial compensation for any losses that have been caused by another party. If one party is expected to bear a greater financial liability related to the cost of damages than the agreement states, this can cause disputes. Find out more here.
Breach of confidence claims. These disputes arise when confidential and sensitive information is shared by one of the parties to the contract, thereby breaching a confidentiality agreement.
Retention of title disputes. Retention of title agreements mean that the goods you supply remain under your ownership until you receive payment. If one party fails to provide payment for goods supplied, disputes may arise when the creditor believes that they have a right to reclaim unpaid for goods, but the debtor claims to know nothing about its existence or refuses to acknowledge the retention of title clause.
Misrepresentation claims. A claim for misrepresentation can occur when one party (the representor) made an untrue statement of fact that persuaded the other party (the representee) to enter into a contract. Find out more here.
Joint venture disputes. Often, these disputes occur when parties disagree about the direction that the business or venture should take, or who will provide certain goods, services or materials.
Professional negligence disputes. Professional negligence disputes are one of the most common contractual disputes. Professional negligence occurs when a third-party professional fails to provide the standard and level of care expected when undertaking an assignment. Read our full guide here.
What is a dispute resolution clause in a contract, and why is this important?
The dispute resolution clause enshrined in your contract provides a roadmap for dealing with any dispute that may arise during the course of your business arrangement. For example, an alternative dispute resolution clause (ADR) allows the contracting parties to agree to use ADR, in the first instance, should a dispute arise. This may be mediation or arbitration, using a method of ADR before considering litigation can help to save money, time and often also saves the business relationship.
This can assist with such issues such as deciding who owns which part of the project and processes, disputes over resources, and ownership of the finished project. You can read some examples of contractual disputes here.
Read more about writing a dispute resolution clause for a contract here.
The benefits of alternative dispute resolution in resolving a contract dispute
Mediation
Mediation is when both parties discuss their dispute in the presence of an impartial trained mediator, who can help you to engage in a civil and productive discussion and come to a conclusion which benefits both parties. This decision is not legally binding.
Mediation is often the quickest and most cost effective option, allowing both parties to maintain a professional relationship. It is also provides a degree of control, in that you often have a say in where and when the mediation sessions occur. Mediation can often a less confrontational method of resolution. Find out more about the benefits of using mediation here.
Arbitration
If mediation is not your preferred option, arbitration, a similar procedure to mediation, may be appropriate. The impartial arbitrator has the power to come to a conclusion on your behalf. Like mediation, it is a much faster and more cost-effective method than going to court to resolve your contractual dispute.
Jurisdiction Clause
A jurisdiction clause defines which jurisdiction any dispute is litigated in. Such a clause, in the event of a dispute, prevents the other party starting litigation in a jurisdiction that is unwelcome to you. Globally the jurisdiction of England and Wales is often the preferred jurisdiction.
When is litigation necessary?
If ADR does not work, then litigation may be necessary. This will involve appointing legal representation, appearing before a court and having your dispute heard and decided by a judge. The final decision made by the judge will be legally binding. You may have the opportunity to appeal if you strongly disagree with the decision. The highly experience dispute resolution and litigation lawyers a Giambrone & Partners always try and use alternative dispute resolution initially before resorting litigation where at all possible. Contact us today to find out how we can help you.
Read more about resolving contractual disputes here.
Preventing future contract disputes from occurring
Ensuring your contract is crystal clear, with no ambiguity and transparently sets out what is expected from each party is vital in preventing future disputes. Clarity on the standard of service you expect from another company, and the terms relating to payments for the services or goods provided to another business. As well as including a dispute resolution and jurisdiction clauses in your contract can also help to ensure that potential complications are resolved quickly and smoothly.
How Giambrone & Partners can assist
Our corporate and commercial lawyers tailor their advice when negotiating and drafting contracts to fit their client’s needs and circumstances. We strive to protect our client’s interests by providing clear legal advice the implications and obligations of every contract are fully understood. Our dispute resolution and litigation lawyers can step in at an early stage to defuse disputes. If this is not achievable, they can assist in litigation to ensure that our clients’ objectives are attained.
We can offer support in relation to all commercial contracts, including:
Confidentiality agreements
Cross-border commercial contracts
Standard terms and conditions for employment contracts
Core business contracts
Consumer contracts
Manufacturing agreements
Licensing contracts
Sponsorship agreements
Marketing agreements
IT contracts
Franchising agreements
Commercial sourcing agreements.
Are you dealing with a contractual dispute with another party? Contact us today for assistance.
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