A contract dispute can be a time consuming and expensive issue to fix. When one party feels the other is not meeting the terms of an agreement, it can lead to project delays or even damage to the working relationship between parties. As such, finding a solution quickly is important so that everything can get back on track with a project and proceed as expected.
What causes Contract Disputes?
Of course this will vary from case to case and industry to industry, however, there are some common reasons a disagreement may arise.
Ambiguity: If a contract is drafted poorly, it can leave requirements upon each part unclear. In this case, the courts will look at the surrounding circumstances of the contract to consider the spirit of what was written even if it is not explicit.
Not Formalised: In a modern tech-laden world, sometimes agreements can be made via many channels. If different elements of a contract are decided over emails, phone calls and other written documents, but never formalised into one document, it can be difficult to verify what was agreed upon.
Contract Delays: The final common reason for contract issues is delays in delivering key parts of the agreement. Often a contract dictates not only what goods or services are being provided, but also a time scale for them to be carried out. Failure to meet the agreed upon deadlines can lead to disputes.
How can Contract Disputes be solved?
There are a variety of ways to resolve disputes with both out of court and in court options, some of which are riskier approaches than others:
Negotiation: This can be done without a 3rd party involved and involves the two contracted parties coming to an agreement on how to proceed. By working together to create a mutually beneficial solution, it can reduce damage to the working relationship.
Mediation: This involves a neutral 3rd party that helps the business and contractor come to an agreement. At the end of the process, if successful, the parties will have agreed a path forward.
Retention: In this scenario, a party withholds the performance of their contracted duties until the terms of the contract are met.
Rescission: If one contract party finds out that the other party does not intend to meet the contracted terms, the contract can be repudiated and rescinded. However, this does not actually bring the contract to an end.
Court Proceedings: If a party wanted to have a formal and enforceable solution, court may be the best option, particularly if a party wishes to seek damages. Court proceedings may also be necessary if the matter simply cannot be resolved.
Pros and Cons of out of court Remedies
When solving a dispute out of court, there may be more flexibility with the type of agreement that can be reached, some cost savings, matters being resolved more quickly, and the potential to minimise risk of damaging valuable business relationships. However, attempts to settle out of court run a risk of no solution actually being reached. If this happens then it can lead to further delays, with court proceedings then still ultimately being necessary.
Pros and Cons of Court Remedies:
Court can be a powerful tool where a party is not willing to discuss matters and sometimes it may be only way to get the order the pursuer wants. If an action is raised as a commercial action in Scotland, the ultimate goal will be for the matter to be resolved as efficiently as possible. Court can take a lot of time though, and there is the risk of exposure to adverse awards of expenses.
However, Alba Commercial Claims is able to mitigate one of the major risks involved court proceedings by offering the opportunity to proceed on a no-win, no-fee basis *. Our innovative funding model and bespoke arrangement with a panel of specialist legal firms allows customers to pursue debts and lodge claims without having to pay any upfront fees.
If your claim does succeed, you will know exactly what the fees will be as we agree this with you in advance, in a way that fairly shares the risks and rewards. You are charged a percentage of the sum you recover.
For help with resolving contract disputes, Alba Commercial Claims can help. Please get in touch with us for a confidential discussion about your claim.
*Other costs could be payable