HOW A CONTRACT DISPUTE ARISES
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 preferable to resolve the dispute without court action wherever possible.
RESOLVING CONTRACTUAL DISPUTES
The best way, of course, to deal with disputes is to avoid them in the first place. A large part of avoiding disputes is a well drafted contract.
In the case a dispute does occur, there are generally 3 ways to go about resolving it, depending upon the nature of the dispute, the relationship between the parties and the timeframe for resolution of the dispute:
1. Informal negotiation:
The best approach initially is always to try to resolve the dispute through discussion and informal negotiation with the other party. Negotiations can be formal or informal. Either way, communications with the other party should be documented.
2. Mediation
Where parties are unable to resolve a dispute by negotiation a third-party mediator can be used to assist the parties to reach a resolution. A mediator may make recommendations that are not binding on the parties or express a view about an issue.
Mediation is not a binding legal process but the resultant agreement can be enforced if necessary.
3. Arbitration:
Arbitration is where the parties refer the dispute to a third party for a determination, which they agree to abide by. The process is similar to court proceedings but much less formal. The arbitrator considers the evidence of the case presented by both parties and then makes a decision that can be legally enforced.
Arbitration by an expert can be particularly useful where the dispute revolves around a disagreement over an issue of a technical nature.
4. Litigation:
If other forms of resolution have not been successful, you may decide to take further action through the Courts.
WHEN TO SEEK LEGAL ADVICE
Legal advice should be sought as early as possible in a commercial dispute. Do not wait until court action is taken against you to seek legal advice.
Experienced litigators can help resolve disputes quickly by using alternative dispute resolution mechanisms and prevent disputes from proceeding to litigation. Obtaining legal advice early on in a dispute can also prevent you inadvertently varying or waiving your rights under a contract.
This fact sheet is for information only. It is recommended that you get legal advice about your situation.
