How Can Contract Disputes Be Avoided

Whether it’s about striking a distribution partnership with a regional client, letting a property to a tenant, or purchasing a business asset – at the heart of every such thing lies a contract.

…And at the heart of every related dispute as well.

That changed pretty quick!

But so is the dynamic nature of this piece of paper that which we call “contract”.

Parties get into agreement by signing a contract and then get into dispute by violating it. And although many contract disputes are settled amicably, many more take an ugly turn – souring the relationship between both the parties.

What then follows [in most cases that is], one party files a lawsuit against the other and they take their dispute to court.

They spend money, time and other resources to get a victory over the other. In the end, they even achieve it, but at what cost?

Ssshhh!!!… let’s not discuss the ‘reputation’ bit – both the parties have already suffered enough.

And now comes the revealing part in all of this discussion…

These contract disputes are avoidable.

In fact, most of them can be prevented by exercising some simple steps and precautions at the time of outset of an agreement.

So if you are planning to get into a business agreement, a tenancy agreement or any other type of agreement, at the time of formalizing the contract, make sure you keep these things in mind to avoid subsequent contract disputes:

Ink everything

Don’t rely on verbal commitments or assurances, write everything down which you believe is an important element of the deal in subject. Even if you have a strong relationship with the other party you shouldmust pen down every clause in document form.

And yes, keep the wordings as clear as possible.

Separately list out the obligations of each party

A contract has lots of sections and subsections. It’s a common practice to space out obligations of each party across these subsections; drafting is much convenient that way.

But what this does is, it masks the obligations and makes it difficult for the reader to spot them when reading the fine print. Consequently, they end up missing out on an important provision when signing the contract and unintentionally fall into a breach.

Make it convenient for everyone; try to separately list the obligations of each party.

Provision a clause of pre-mature termination

This is a very important tip and a clause which you must mention as part of the contract. Of course, you need to set in certain conditions when incorporating the clause (which means investing extra time and lending additional consideration to drafting a contract), but don’t let that extra work deter you from including it.

Always get the contract proofread by a solicitor

Contract terms and industry jargons can sometimes be confusing and misleading. There is every chance that the contract you have drafted contains a clause which may mean something else for you and something completely different in the context best served in your particular case.

A professional solicitor in the UK would be able to point out any nicks or loopholes in the contract and will guide you on how to address them before the ink is set to paper.

The key to avoiding costly contract conflicts and disputes is in proper planning and reviewing at the time when a contract is being drafted. Don’t treat this stage with negligence.

Further reading: 5 Practical Tips for Negotiating a Favourable Commercial Lease