What is the best contract dispute resolution process?

There are always creative options available for resolving disagreements over contracts, sometimes with surprising results – like the ability to purchase something at a fraction of its advertised cost.

Whatever level of disagreement or dispute you have that you need to resolve, litigation (going to court) should always be your absolute last resort. Unfortunately, there are people who do believe they are right, despite all evidence to the contrary, and who think that going to court is the way to have a judge agree with them. Other people want to go to court on the principal that they will not be seen as an easy mark, even if they know they are unlikely to be successful. If you are in dispute with someone like that, you may have no choice but to participate in court proceedings. We just don’t recommend it.

We will work with you to resolve disputes as quickly and cost effectively as possible.

Communication

The key to resolving contract disputes is balanced communication. You might want to explain to the other side why you are right and they are wrong, but that often just prolongs the dispute.

Focus on the solution, rather than the problem. Accept that each of you have your own views on a topic, and rather than arguing about who is wrong or right, work out what needs to be done to move forward.

Apologise

There are now laws across Australia that specifically state that an apology cannot be used as evidence of fault or the determination of fault and is not an admission of liability for any event or problem.

One of the quickest ways to defuse emotion in a dispute is to give an honest and simple apology.

Get Help

You might be so wrapped up in what caused the dispute in the first place that you can’t come up with creative solutions to fix the problem yourself. This is when you need to get help. Help can come in many forms and from lots of differently qualified people. Some professionals have a broad range of skills, others might have more specialised skills like these –

  • lawyers can help sort out contractual disputes and meanings of clauses
  • psychologists can help identify underlying problems you might have that are making the dispute worse
  • business advisors can propose creative options for the future that help you get around the immediate obstacles
  • mediators can broker a deal between parties who are at a stage where they cannot communicate effectively
  • judges and arbitrators will impose a result

Case study

A client was owed money under a contract and the customer was close to insolvent (meaning they couldn’t pay their debts when due and didn’t have sufficient assets to cover all the outstanding debts).

The strictly legal approach is to join or commence debt recovery proceedings in an effort to get paid. The trouble is that process costs around $7,000 at a minimum and if the debtor is insolvent and goes into bankruptcy or liquidation, you are unlikely to see either your money, or the additional costs of that process.

We worked with the client to find a solution that meant the client didn’t lose any more money, wasn’t seen as an easy mark in the marketplace and was able to acquire a complementary section of its customers business in way that increased the value of the client’s business. This all started with open communication with the customer.

For another example of dispute resolution, have a look at what we did for a client in a trade mark dispute.