One fundamental reason behind the creation of a contract is to potentially avoid disputes, deter breaches, minimize risk as well as allocate responsibility in the event of a dispute. The terms and conditions of a contract are laid down with the consent of both parties, therefore, the contract tries to ensure that both parties abide by the laid down rules, failing which it stipulates potential penalties. Furthermore, in the event of the breach of a contract any of the parties can go to the court for the possible remedies.
There no denying the fact that even well-written contracts have often been bedeviled by issues, which have eventually led to lengthy contractual litigation disputes. At the heart of these disputes are contractual breaches –often due to the inadequate performance of one party to the contract, different interpretations of certain contract provisions, misunderstandings on certain terms of the contract, among others. Besides these, there can be various outcomes that result from a contractual dispute.
The following are a few of some such ways that can lead to an avoidance of contractual disputes.
Negotiating in Good Faith
One of the basic principles of a contract is the duty to negotiate in good faith as well as with all the terms and conditions clearly stated and understood by all parties, so as to leave no room for ambiguity. Unfortunately, some people willingly and knowingly engage in deceitful practices for the sole purpose of obtaining a favorable outcome for them, to the detriment of the other party.
It is therefore important for all parties to a contract to ensure that they fully understand all the terms of any contractual relationship they are about to enter into, to ensure that their rights and interests are protected. Very often, and especially for more complex contracts, this should involve consulting with a contract attorney to have them review the contract and ensure that none of it’s terms would be detrimental to you down the line.
While one would ordinarily hope and expect the other party to negotiate the terms of the contract in good faith and work towards a win-win situation, the sad reality however, is that more often than not, many parties to a contract often prefer a zero sum situation where they come out on top in the contractual relationship. A good business attorney can help mitigate this risk.
On the contrary, a good contract that entails fair and equitable conditions for all parties involved, is less likely to cause disputes down the road.
Setting the Priorities
Once a contract is signed by the principal parties to it, it is incumbent upon them to live up to the contract in letter and spirit. It is also in the best interest of all parties to act in good faith and have open lines of communication at all times. One benefit of doing this is that it helps to maintain a healthy relationship between the parties, which can lead to mutual respect, which then can potentially help them spot potential friction in the everyday execution of the contract, before it grows to a full-blown conflict or contract breach.
Therefore, to avoid potential disputes, contractual parties need to feel comfortable with communicating with each other, and are willing to amicably work together to solve any problem that arises.
Focus on the Means, not the End
Contracts often have one or more objectives or end goals, and the contract is meant to serve as a road map to get achieve that objective. The drafting of such a contract should therefore ensure that it includes a SMART (Specific, Measurable, Achievable, Realistic and Time-Bound) road map, or means, to get to that end-goal. Each party to the contract should also ensure that they are on board with the specific road map the contract is setting, which again underscores the role of a contract or business lawyer in explaining every single aspect of a contract before you sign it.
Having said that, a contract that has the objective in sight when drafting the road map to get there, wherein all parties understand and agree on that road map can often reduce the chances of a contract breach, baring of course, unavoidable circumstances that lead to a breach by either party.
Automate as Appropriate
One of the best and easiest ways to prevent a contract disputes, or at least limit its possibility is by automating the contract management process. In this method, an online system can be used to manage contract portfolio, contract deadlines and key milestones, while progress can be measured as well as evaluated efficiently and quickly. Though utilizing technology has its own set of benefits as well as challenges, human errors are far more likely to cause a contract dispute, when relied on exclusively.
Incorporate Reasonable Recourse
Irrespective of one party’s efforts to avoid a contract breach, and therefore a dispute, the probability of something still going wrong at any point in time is always present. This situation becomes even more true in complex or long-lasting contractual relationships. Therefore, it is imperative for any contractual relationship that you enter into, to contain clauses that spell out what possible recourse exist, in the event of a dispute. On the flip side of this, deterring certain negative actions by spelling out the consequences can also help reduce the potential of a party to wilfully breach contractual terms.
Hire an Attorney
Summarizing the above discussion, it is imperative for both parties to follow the contractual term & conditions in letter and spirit, and for that take the help of an experienced attorney, who can help you throughout the whole process.
Angelo Simone, Esq. is a founding partner at the law firm of Simone & McCahey LLP. Our team of lawyers are experienced and aggressive lawyers who are ready, willing and able to protect your best interests and provide you with legal guidance you can trust.