A dispute contract is when one or both parties to a contractual agreement are unable to agree on the terms of the agreement. This can be a frustrating situation for everyone involved and can have a negative impact on business. However, there are a few things that can be done to minimise the risk of a contractual dispute occurring and to avoid it entirely if at all possible.
The first step is to identify the issues that could cause a dispute. This will help to focus your thinking and can be a good way of determining which legal issues should be the subject of negotiation, mediation or litigation.
Dispute resolution clauses can take many forms but should provide a clear mechanism for the resolution of disputes. They should also ensure that the process of resolving disputes is certain and transparent to all parties.
Arbitration is an important option for many contracts. It provides an impartial and independent forum for resolving disputes and is usually more cost-effective than court proceedings and may result in faster results.
Mediation is a popular alternative to arbitration for resolving disputes and can be particularly effective in assisting parties to avoid litigation or arbitration.
In addition to a dispute resolution clause, it is important that a written contract is in place which sets out the agreed terms and any other conditions. This is essential to prevent any misunderstandings or disputes from arising later on, which can be costly and time-consuming to resolve.
It is also important to include an appropriate jurisdiction clause within the contract. This can be either exclusive (meaning that one party has the right to bring a dispute to a particular court) or non-exclusive, meaning that each party has the choice of where the dispute should be resolved.
This will ensure that the courts of a specific jurisdiction have been agreed upon and that all parties are in agreement as to which court is appropriate.
A jurisdiction clause is generally a more flexible form of clause than an arbitration clause and can be included in a range of agreements. It can be an effective way of avoiding the costs associated with litigation and is often a desirable alternative to arbitration in complex or technical cases where expert determination is required.
Whether you are considering a dispute resolution clause or not, it is always advisable to seek professional advice from a solicitor before signing the contract. This will ensure that you have all of the information you need to make the best decision for your situation and protect your rights and interests.
You should also be aware of any statutory limitation periods that apply to the contract. This will help to determine when you have the requisite legal time to bring a claim.
Getting it wrong can be devastating for your business and your reputation, so you must ensure that your dispute resolution clause is comprehensive, accurate and tailored to your specific needs. This can be a difficult decision to make but it is well worth taking the time and care to do so in order to avoid unnecessary costs, delays and stress.
