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Effective Strategies for Resolving Business Contract Disputes

When it comes to contracts, it’s all in the details.

Of course, some deals go off effortlessly, and the arrangements could have been a handshake instead of intricate legal paperwork.

However, when push comes to shove between two parties, everyone returns to the basics – opening the drawer and dusting off their legally binding agreement.

In my years of practice, I have encountered business contract disputes across different industries. Notably, the construction sector has the greatest frequency of claims and disputes – 21% of contracts affected.  This is one of my areas of greatest expertise, as I have been recognized in 2023 as one of Michigan’s “Go-To” lawyers for construction law.  This was undoubtedly based on my getting the largest verdict or settlement in the State of Michigan in 2010 on a construction lawsuit for the City of Dearborn.

While I am proud of my track record of litigating and winning the most complex legal cases in business law, I am equally proud of the fact that my firm and I have played a large part in finding effective resolutions that helped both parties resolve disputes and move forward.

Let me share some insights on 3 strategies to help your business navigate and resolve any future contract disputes amicably and efficiently without putting money in the pockets of attorneys:

  1. Practice open communication and negotiation

    Getting two parties to sit and talk is often a stumbling block, as disagreements between businesses or among business partners may bring out some bad manners. However, it’s key to get both parties to understand how crucial constructive dialogue is – keeping both sides happy will serve their differing perspectives and interests.

    This is a job not for the faint of heart — it can take a skilled negotiator, whether an attorney or a trained mediator, to come out of the negotiations with both parties agreeing to find common ground and explore potential solutions.

    Personally? I encourage those involved to consider mediation when suitable. This can save time, money and unnecessary stress.

  2. Review the contract thoroughly

    I advise my fellow lawyers to review the contract in dispute first, thoroughly, long before proposing legal action. Dive deep into its terms, conditions and clauses. Try to identify potential areas of contention while assessing the strength of each party’s position. Should litigation arise, the legal teams will then have a greater understanding of the contract which will help them develop legal strategies.

    Pursuing non-litigious methods first is generally preferable, as I mentioned earlier. Provide clients comprehensive guidance, helping them understand the potential risks and benefits of pursuing litigation. There are a handful of alternatives, including exploring contractual remedies or engaging in alternative dispute resolution — a more private, expedited and less formal process.

    According to a survey conducted by World Intellectual Property Organization’s (WIPO) Arbitration and Mediation Center, “cost and time are the principal considerations for respondents when negotiating dispute resolution clauses,” it stated.

  3. Preserve the business relationship

    In some instances, the arguing parties realize later on that it is in the best interest of both of them to preserve the business relationship and reinstate the agreement. This is one of the most basic but crucial possibilities that lawyers need to evaluate when trying to resolve business contract disputes.

    I tell my clients that I advocate for creative solutions that allow them to move forward amicably. By focusing on mutual interests and finding compromise, it is possible to salvage the relationship while resolving the conflict.

THE BOTTOM LINE

Businesses have interests to protect, and more likely than not, a successful resolution can be found out of court, through careful negotiation and responsible mediation.

Even if litigation is seen as the best course of action, the goal remains the same: Finding out what’s best for both parties may end up being what is best for you or your client.

SOURCES:

Attorney Profile – Gary August. August Law. Retrieved from https://www.august-law.com/garyaugust.

Most Negotiated Terms and Conditions (2014) International Association for Contract and Commercial Management. Retrieved from https://commitmentmatters.com/2014/04/23/are-you-in-an-adversarial-industry-insights-for-contract-negotiators-and-managers/.

Areas of Practice. August Law. Retrieved from https://www.august-law.com/areas-of-practice.

International Survey on Dispute Resolution in Technology Transactions (2013). World Intellectual Property Organization. Retrieved from https://www.wipo.int/export/sites/www/amc/en/docs/surveyresults.pdf.

Contact Us. August Law. Retrieved from https://www.august-law.com/contact.

Perkov, D. (2016) Business Negotiation as a Crucial Component of Sales. International Journal of Innovation and Economic Development. Retrieved from https://researchleap.com/business-negotiation-crucial-component-sales/.

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