A contract conflict, also commonly referred to as a contract dispute, can occur when the terms of a contract are violated or ignored. In general, the majority of contract conflicts arise after a contract has already been signed and finalized. Thus, most lawsuits that result from contract conflicts will be based on a claim for breach of contract. For example, if one or both of the parties fails to perform their duties in accordance with the terms of the contract.
However, there are some types of contract conflicts that can happen during the earlier stages of contract formation. For instance, the parties might engage in a conflict over the meaning of a particular word or clause in the contract while its terms are being negotiated. If the issue is not resolved before the contract is signed, then the issue may appear again in the future as a lawsuit for mutual mistake, unilateral contract error, or possibly even for breach of contract.
In order to prevent a contract conflict from happening, the contracting parties should hire their own contract lawyers to represent them in negotiations and while drafting the final version of the contract. Contract lawyers can help ensure that their clients fully understand the terms of the contract as well as the legal obligations they will have once the contract is signed by all interested parties.
Additionally, a contract lawyer can clear up any discrepancies regarding the definition of a specific word or trade term, and can clarify the meaning of ambiguous or vague language in the contract. Contract lawyers can also discuss the various scenarios that could lead to a breach of contract lawsuit under a specific agreement. Thus, you should hire a contract lawyer if you are planning on entering into a contract.
What are Some Types of Contract Conflicts?
Contracts govern nearly all agreements associated with business and/or professional relationships. Thus, the exact nature of a contract conflict will depend on the subject matter that is in dispute. For example, some contract conflicts are the result of employment disputes like breach of an employment agreement or an employment discrimination lawsuit.
Some examples of the most common types of contract conflicts that occur on a regular basis may include:
- Failure to deliver products or render payment for those products;
- Breach of a residential or a commercial lease agreement;
- Issues concerning the price, quantity, date of delivery, and/or other important terms;
- Illegal assignment of contract duties or benefits to an external party;
- The use of fraud, coercion, deceit, misrepresentation, or duress while negotiating the terms of the contract, during the signing of the contract, and/or in fulfilling the legal duties of the contract (e.g., submitting a fraudulent invoice);
- Breach of any of the contract terms or duties, such as if an employee disclosed secret company information that was covered by a non-disclosure agreement (“NDA”);
- Anticipatory repudiation of a contract when the circumstances do not warrant it;
- Frustration of purpose or other excusable delays that do not apply to the situation at hand;
- Breach of an explicit or implied warranty in a contract; and/or
- Various issues found in construction contracts, such as:
- Errors while executing the construction contract;
- Conflicts involving safety and hazard issues,
- Problems with completing a construction project on time,
- Disputes over the cost or quality of construction materials, and/or
- Labor or union disputes (e.g., wage and hour lawsuits or claims for workers’ compensation).
As is evident from the above discussion, there are many ways that a contract conflict can arise. Thus, contracting parties would be wise to retain legal counsel before signing a contract.
What are Some Methods for Resolving Contract Conflicts?
The majority of contract conflicts are resolved by filing a private civil lawsuit in a local court. The court will determine whether the parties should attend mediation if they have not already tried it yet or may decide that it requires a court to oversee the matter.
In the latter case, the court may order the parties to cancel or redraft parts of or the entire contract. However, all methods of resolution will depend on the laws of the state hearing the case, as well as the type of contract issue that is in dispute. It could also hinge on the kind of remedy that a party is requesting.
In general, the remedies for a contract conflict can be divided into two separate categories: legal remedies and equitable remedies. Some examples of legal remedies may include:
- Compensatory damages;
- Liquidated damages;
- Punitive damages;
- Quantum Meruit;
- Restitution; and/or
- Nominal damages.
On the other hand, equitable remedies refer to court awards that do not involve monetary damages. Instead, equitable remedies usually require the contracting parties to perform some type of act, such as in the above example where the parties were ordered to redraft or cancel their existing contract. Some more examples of equitable remedies may include:
- Specific performance, such as having to deliver goods that were previously paid for or paying the other party the amount that was initially agreed to when forming the contract;
- An injunction to either force the parties to do or refrain from doing a certain action that affects the contract; and/or
- Reformation of the contract to clarify a mistake, clerical error, misunderstanding, or omission in the contract.
In addition, there are also many ways that the parties can go about solving the contract conflict. Aside from filing a private action in civil court, the parties may decide to resolve the issue on their own without legal counsel or the court. This method is referred to as informal negotiation. In contrast, the parties can also retain counsel and agree to attend formal mediation and/or negotiations (i.e., a settlement agreement) instead.
Depending on the terms of the parties’ contract, they may need to settle the matter in arbitration. Arbitration is less formal than litigation, but more formal than mediation and requires the use of a neutral third party to resolve the dispute. The decisions in an arbitration can either be made non-binding or binding. However, if an arbitrator issues an award, the arbitration award will be binding on both parties.
Do I Need a Lawyer for Help Resolving Contract Conflicts?
Lawsuits that result from contract conflicts can be very hard to manage without the help of a legal expert. This is because contract conflicts often involve a combination of different legal issues, the application of various federal and state laws, and in some cases, multiple parties. Therefore, it is strongly recommended that you hire a local contract lawyer if you are involved in a conflict regarding a contract issue.
An experienced contract lawyer will be able to identify any potential claims you can bring against another contracting party, can help you file a lawsuit against that party based on the claim, and can provide representation in civil court. In addition, your lawyer can assist you with negotiating and drafting the final terms of a contract, as well as can review an existing contract to ensure that it is valid and legally enforceable.
Finally, if you have any questions about your contract or need advice on how to resolve a contract conflict through mediation, your lawyer will be able to answer your contract questions and can help you navigate the mediation process. Your lawyer can also discuss the different types of remedies you may be able to recover if your contract case is successful.