Resolving Contract Conflicts

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 What is a Contract Conflict?

A contract conflict can arise even before the contract is formed. For instance, the parties might conflict over the meaning of a particular word or clause in the proposed 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.

A contract conflict, also commonly referred to as a contract dispute, can also arise when the terms of an executed contract are violated. Indeed, most contract conflicts arise after a contract has been signed and finalized. Most lawsuits that result from contract conflicts will be based on a claim for breach of contract. This happens when one of the parties fails to perform their duties per the terms of the contract.

Note: To prevent a contract conflict, the parties should hire their own contract lawyers to represent them in negotiations and while drafting the contract. Contract lawyers can help ensure that their clients fully understand the contract terms, including the legal obligations they will have toward each other. A contract dispute lawyer can also ensure that the contract is complete and that it contains all of the provisions that the client wants the contract to have.

Additionally, a contract lawyer can clear up any discrepancies regarding the definition of a specific word or trade term and any ambiguous or vague language in the contract.

Contract lawyers can also discuss the various scenarios that could lead to a breach of contract lawsuit, depending on the arrangement between the parties and the circumstances surrounding the facts that gave rise to the contract. You should hire a contract lawyer if you plan on entering a contract.

What Are Some Types of Contract Conflicts?

Contracts govern nearly all agreements associated with business or professional relationships. If there are a thousand contracts, there will be many different ways a contract conflict can show up. Some examples of the most common types of contract conflicts include:

  • Failure to deliver products
  • Failure to render payment for those products
  • Failure to leave at the end of a residential or a commercial property lease agreement
  • Anticipatory repudiation of a contract when the circumstances do not warrant it (anticipatory repudiation is a way of terminating a contract before all of its terms have been completed)
  • Differences between the parties concerning what the contract says about price, quantity, date of delivery, or other important terms of the deal
  • The use of fraud, coercion, deceit, misrepresentation, or duress while negotiating the terms of the contract, during the signing of the contract, or in fulfilling the legal duties of the contract (e.g., submission of a fraudulent invoice)
  • Breach of any of the contract terms or duties, such as if an employee discloses secret company information that was covered by a non-disclosure agreement clause in the employment contract
  • Frustration of purpose or other excusable delays that apply or do not apply to the situation at hand
  • Breach of an explicit or implied warranty in a contract

Construction contracts provide a good example of how conflicts can arise. Various issues found in construction contracts can conflict, such as:

  • Errors while executing the construction contract
  • Problems with completing a construction project on time
  • Disputes over the cost or quality of construction materials involving safety and hazard issues
  • 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 should retain legal counsel before signing a contract.

What Are Some Methods for Resolving Contract Conflicts?

Most contract conflicts are resolved by filing a private civil lawsuit in a local court. If the parties have not tried mediation or arbitration to resolve their differences, the court has the power to demand that the parties attempt one or both of them before a lawsuit can move forward.

If a lawsuit is necessary, the court may order the parties to cancel or redraft parts of the contract. All resolution methods 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.

The remedies for a contract dispute can be divided into two separate categories: legal remedies and equitable remedies. Examples of legal remedies include:

  • Compensatory damages (damages to make up for all the damage done – physical damage, loss of profit, etc.)
  • Liquidated damages (a figure that the parties agreed on at the time the contract was signed)
  • Punitive damages (damages intended to punish the defendant)
  • Restitution (restoring the plaintiff to where they were before the contract was entered into)

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. Examples of equitable remedies include:

  • Specific performance (forced fulfillment of the contract obligations, such as going through with the sale of a family antique)
  • An injunction to either force the parties to do or refrain from doing a certain action that affects the contract
  • Reformation of the contract to clarify a mistake, clerical error, misunderstanding, or omission.

There are also many ways that the parties can go about solving a contract conflict. Instead of, or in addition to, filing a private action in civil court, the parties may decide to resolve the issue on their own through negotiations, hoping to reach a settlement agreement. This method is referred to as informal negotiation.

The parties can also agree to attend formal mediation. This option consists of involving an independent third party who is trained in helping parties resolve disputes. The mediator will see the dispute with fresh eyes and can give an opinion as to the merits of the case. The mediator’s opinion is not binding on the parties – it’s an educated evaluation, not a final order.

Another dispute resolution methodology is arbitration. Arbitration is less formal than litigation but more formal than mediation. Like mediation, a trained facilitator helps the parties reach an agreement. The difference from mediation is that the decision in an arbitration can be binding on both parties.

Do I Need a Lawyer to Help Resolving Contract Conflicts?

Lawsuits that result from contract conflicts can be very hard to manage without the help of a legal professional. This is because contract conflicts often involve the application of various federal and state laws to different legal issues. Conflicts in contracts can also involve multiple parties, which complicates things. 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. Your lawyer can also discuss the different types of remedies you can recover if your contract case is successful. In addition, your lawyer can assist you with preparing for and conducting mediation or arbitration.

One of the best uses of a lawyer’s talents is to have the lawyer conduct negotiations with the other party’s lawyer. The parties to a lawsuit can get quite angry about the dispute, interfering with their ability to negotiate. Your lawyer will be able to press for the best resolution for you calmly and professionally.

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