In the event of a dispute, most commercial contracts include provisions for dispute resolution. The parties can plan for how they want to handle a dispute by incorporating a dispute resolution procedure (DRP) in the contract. In this article, Contract Dispute Resolution, we take a look at how to resolve commercial disputes and the options open to you.
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For a free initial discussion on how we can help you if you are involved in a contract dispute, get in touch with us today. We are experienced in dealing with all forms of commercial litigation and dispute resolution. We will review your situation and discuss the options open to you in a clear and approachable manner. Early expert legal assistance can help ensure you avoid the stress of dealing with these issues on your own. Simply call us on 0345 901 0445 or click here to make a free enquiry and a member of the team will get back to you.
The first thing to do is review the contract
The first thing to do is read the contract thoroughly. You can use the details provided in the contract to figure out the elements discussed below.
The gravity of the disagreement
You can determine what constitutes a breach of contract by looking at the contract provisions and figuring out which clause was breached. In the event of a material breach, the contract may be terminated and the innocent party may seek compensation for damages.
If the breach is minor, the innocent party is limited to seeking compensation for incidental and consequential damages, and the contract itself remains in effect.
Knowing the gravity of the disagreement is essential in grasping its implications, the parties’ entitlements, and the possible avenues for finding an alternative resolution.
How the terms of the contract should guide negotiations to reach a settlement
When evaluating the contract to determine the appropriate course of action for the disagreement, there are a few items to check. Here’s a quick rundown of these:
Which jurisdiction’s laws will apply to this agreement?
Jurisdiction refers to the body of law that controls the interpretation and enforcement of a contract. This is likely to be spelled out in the contract itself, but if you’re having trouble figuring it out, you should consult a solicitor.
Is there an alternative dispute resolution (ADR) provision in the contract, even if it’s not binding?
One option to help the parties achieve an amicable resolution of the situation is to include a clause in the contract outlining the procedures you and the other party must follow before engaging into a binding decision. There are four types of alternative dispute resolution or ADR, in the UK: mediation, negotiation, conciliation and arbitration.
Is there a jurisdiction provision (legally binding decision) in the agreement?
The parties agree to submit their dispute to a neutral third party for settlement under the terms of this provision, which is a legally enforceable method of dispute resolution. Arbitration agreements and expert determination or adjudication are the most prevalent methods used to get a final and binding ruling instead of going to court.
Is there an escalation provision?
There is an escalation provision (sometimes called a tiered dispute resolution clause) if the parties to the contract initially agreed that their respective representatives would attempt to resolve the matter through good faith negotiations. The parties’ obligations to take certain actions before reaching a final, legally binding judgement are also spelled out in the escalation clause.
Typically, a binding dispute resolution decision comes after a first period of internal management deliberation (say, 20 days from notification), followed by an option for non-binding ADR. The escalation clause is enforceable in court and applies only to arbitration proceedings. An accomplished business contract solicitor can guarantee proper procedure.
In the absence of a written agreement, it is prudent for the parties to analyse all relevant correspondence. Timelines, deliverables, and service descriptions can all be included on an invoice, while costs can be found in an accompanying email or letter.
Typical causes of dispute
Disputes over contracts can arise for many different causes, including but not limited to:
- Problems that come up during a contract review
- Whose terms and conditions govern the provision of the products or services in question
- If products were delivered to a customer before they signed a copy of the terms and conditions, are they still subject to the terms and conditions?
- Can the final consumer file for cancellation and damages if the supplier is late in delivering the products or services?
- Doubts about a contract offer you made
- Contractual disputes involving the interpretation of technical concepts
- Errors and omissions
- Fraud
- Employee or partner disputes in a commercial setting
- Conflicts arising from one party’s breach of a contract
What are pre-action protocols?
Before a commercial dispute can be formalised, there must first be an established basis for a claim. A significant aspect of the commercial dispute process is providing evidence that you tried to take every possible action to avoid going to court. In many English courts a “pre-action protocol” may be required that needs to be met in full. However, if this does not apply to your case, it does not need to be enacted.
If a case has good standing and the client has contacted the relevant professionals, they can complete a claim form and send it to a relevant court.
If the claim is more significant, the UK legal system uses a three-track system to resolve the issue:
- Small Claims – any claims that have a value below £10K and will last for less than a day.
- Fast Track – any claims with a value between £10K-£25K and will last for a day or less.
- Multi Track – any complex claims with a value of £25K or more and will last for more than a day.
Once tendered, the chosen court will deliver what is known as an “order for directions” that will stipulate the process for carrying out how the case will be conducted. This gives guidance on what documents need to be disclosed, due process, timetable for the trial, and other variables that are specific to your case. Once complete, the case is formally listed for a judge to reach a decision over.
Contract dispute resolution
Contract disputes have the potential to waste time and money quickly. To avoid further escalation, it is critical that the conflict be settled as soon and as peacefully as possible.
One must look at what was agreed upon between the parties and how well written the agreement was. Determine the specifics of the other party’s breach of contract and reflect on whatever complicity you may have had.
Emails, phone calls (if recorded), and written contracts should all be collected as proof.
Figure out how much money you lost and how much the other side claims they lost.
You should seek out a mutually agreeable solution. It will be much easier on everyone involved and cheaper overall than going to court. Document your negotiations by keeping notes and copies of correspondence.
Mediation, arbitration, adjudication, and negotiation are some examples of ADR that could be mentioned in a contract. This procedure must be followed before any legal action is taken.
Remind the other party that they owe you money and see if they have the funds to settle the claim or not. If the other party has little financial resources, litigating a claim is pointless. Think about how payments would be handled if the other side is able to pay.
Maintain a willingness to compromise. To avoid future setbacks and inconvenience and the possibility of legal action, it is best to accept any reasonable offer.
If you win in court, you must be ready to use judgement enforcement to collect payment.
How we can help
We have a proven track record of helping clients involved in contract disputes. There can be an array of issues to take into consideration and we will guide you through all the necessary legal due diligence in a comprehensive and timely manner and support and advise you with all the negotiations. We firmly believe that with the right solicitors by your side, the entire process will seem more manageable and far less daunting.
Please click here to find out more about our Commercial Litigation services.
How to contact our Commercial Litigation solicitors
It is important for you to be well informed about the issues and possible implications of a contract dispute. Expert legal support is crucial in terms of ensuring a positive outcome to your case.
To speak to our Commercial Litigation solicitors today, simply call us on 0345 901 0445, or click here to make a free enquiry. We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.
Disclaimer: This article provides general information only and does not constitute legal advice on any individual circumstances.
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