A contract dispute occurs when any party in a contract has a disagreement regarding any of the contract terms or definitions. In order for a contract to be valid, there must be a "meeting of the minds." This means that all parties need to have a solid understanding of every contract term, and must be in mutual agreement as to the terms. Without a mutual agreement, the contract is not legally valid and may be contested in court.
In contract law, a contract dispute is usually considered a breach of contract, meaning that a party failed to perform a duty or promise that they agreed to in the contract. There are two different types of contract breaches: Material Breach and Minor Breach.
Material Breach: A material breach in a contract occurs when a party fails to perform a contractual duty and the breach is so crucial and deep that it makes the agreement or purpose of the contract irreparable. Usually this occurs when the heart of the contract is not satisfied because of the breach. When a material breach occurs, the non-breaching party does not have to perform their end of the contract and can sue the breaching party in return for any damages caused by the breach.
Minor Breach: A minor breach occurs when there is a breach of contract by a party, but the breach is very minor and does not disrupt the heart of the contract. When minor breach occurs, both parties must still carry out the remainder of the contract, but the non-breaching party may sue for damages.
What Are Some Common Contract Disputes?
Contract formation can often be a lengthy and involved process. There are many steps that need to be fulfilled along the way. In order for a valid contract to be formed, there must be: 1. an offer, 2. an acceptance of the offer, and 3. some form of consideration (or payment) for the goods or services at issue. Contract disputes can during any of these steps.
Some common types of contract disputes may include:
- Issues with drafting and reviewing a contract
- Offer and acceptance disputes
- Mistakes and errors concerning the terms of the contract
- Disagreements as to the meaning or definition of a technical term
- Fraud and coercion—there is no "meeting of the minds" if a person is forced or tricked into signing the contract
Even if a contract is properly formed, there may be disputes as to the performance of contract duties. If a party fails to perform their side of the bargain, it can cause a legal dispute. For example, if a seller fails to deliver goods that were purchased by the buyer, then the buyer my seek various legal remedies for "non-performance" of the sales contract.
What Are Some Remedies for Contract Disputes?
Remedies for contract disputes are usually divided into two main options: legal remedies and equitable remedies.
- Legal remedies usually involve a monetary damages award paid to the plaintiff for their losses.
- Equitable remedies involve the parties taking certain actions to correct the contractual dispute. Examples of these include rewriting the contract to correct errors, or requiring the breaching party to perform their contract duties.
In most cases, the parties will be able to choose between either legal or equitable remedies.
What Are Some Tips for Avoiding Contract Disputes?
Many disputes can arise due to the parties not being clear on the contract terms. In some instances, it can even boil down to a single word or definition contained in the contract. Some tips for avoiding contract disputes are:
- Writing is important: Be sure to continually document negotiations in writing, at each step of the way. That way, you can keep track of the history of offers, amount of product, prices, and other important terms. It is possible to forget some contract terms within a day or two or even within a few hours. The final contract should be in writing as well.
- Know what you want: It is difficult to arrive at a suitable agreement if you are the other parties involved are unclear as to the goal of the contract. You should be able to state each negotiating point very clearly, such as selling price, product quantity, and other amounts. It is okay to work with price ranges and other estimates at first, but these need to be finalized to specific amounts during contract drafting.
- Watch for any changes: Be especially careful in cases where you are working with a new negotiator or when a product changes. Check for personnel credentials and double-check terms to avoid contract fraud.
- Be very clear: Define highly technical words or trade terms. This can help you avoid contract mistakes and misunderstandings.
- Hire a contract attorney: It helps to work with a professional, such as a lawyer or mediator if needed. This can help things run more smoothly during negotiations. Also, in the event of an actual contract dispute, having a lawyer on hand already can help minimize delays and additional legal disputes.
Do I Need a Lawyer for Assistance with a Contract Dispute?
Contract disputes can involve many different legal concepts. These can sometimes be complicated and difficult to understand. You may need to hire a business lawyer if you need assistance filing a lawsuit for a contract dispute. Your attorney can represent you in court and can help determine what types of remedies might be available to you under the law.