What is a contractual dispute

What is a contractual dispute? 

Unfortunately, as with any sort of relationship, business disputes in relation to a contract can arise. These contractual disputes are between the parties to the contract, and can relate to: 

• The terms of the contracts 

• Parties’ performance of their duties under the contract 

• Any alleged breaches of the contract  

What constitutes a contract 

The elements of a contract are: 

• Making of an offer 

• Acceptance of offer 

• Consideration (usually payment) in exchange for the goods or services provided as part of that contract 

Contractual disputes 

Contractual disputes can range from very minor breaches or issues to more significant allegations or disputes. Sometimes a contractual dispute is anticipatory and relates to a breach that is yet to take place. This can happen where one party states or indicates that they do not intend to fulfil an important obligation have under the contract.  

There are various ways contractual disputes can arise: 

• Mistakes or disagreements over the terms (including technical terms) or definitions used in a contract 

• Issues arising following a contract review 

• Mistakes or errors in the contract 

• Allegations of breaches of contract, for example that a party has failed to perform their duties under the contract 

• Fraud 

• Disputes between employees and their associates 

How to resolve a contractual dispute? 

Although litigation via the courts is a way to resolve a dispute, there are also other methods that may be possible depending on the nature of the dispute, parties in question and their desired outcomes.  

Alternative Dispute Resolution (ADR) can provide a quicker and cheaper means to resolving the dispute, as well as offering additional confidentiality. This route may be desirable when the parties in dispute wish to preserve their business relationship, which can be difficult to do if the parties end taking the matter through the court court. ADR is also more flexible than the court process and if the parties reach an agreement outside the court, they can insert clauses in relation to further contracts, which might be an important part of the settlement reached but outside of the court’s jurisdiction.    

There are various ADR options: 

• Negotiation 

• Mediation 

• Arbitration 

• Round tables with parties and their solicitors attending – more informal than mediation 

• Early neutral evaluation 

• Expert determination or appraisal 

Mediation 

Mediation has become increasingly popular in recent years. If successful, it tends to be a much quicker, cheaper, and more flexible method of dispute resolution, allowing a much greater control and privacy to the parties. As the aim is to reach an agreement between the parties, it is less combative than litigation.  

Mediation also has its disadvantages: 

• It will only be successful if the other side is willing to genuinely negotiate.  

• It does not provide a similar level and duty of disclosure as in the court proceedings. 

Although parties are not required to use mediation, they will need to at least consider the suitability of mediation or other forms of ADR before issuing proceedings and at various stages thereafter. Otherwise, they might face negative cost consequences even if the case is decided in their favour.  

The importance of good legal advice  

In the case of a contractual dispute, the parties should aim to find a solution if possible that: 

• Is cost and time effective 

• Does not affect the way the company is run or does its business 

• Preserves confidentiality of information 

• Does not affect any necessary business relationships or damage the company’s reputation 

Contractual disputes, if handled poorly, can have devastating consequences for a company or individual, their finances and reputation. Therefore, it is extremely important to seek legal advice at an early stage when a potential issue arises, to ensure that the remedies sought and the method of dispute resolution used, are the most appropriate ones for the case, ensuring a timely resolution of the matter and preventing wasted costs.  

Our Civil Litigation department at Vardags has extensive experience in the field, particularly in commercial litigation and in all forms of ADR. We understand that litigation in court is not always the most suitable method to resolving a dispute. We will develop a case strategy to best target your desired outcome whilst minimising the time and costs involved. However, sometimes litigation becomes necessary to achieve the best result or to resolve a dispute, in which case we will pursue your case through the court process in a robust manner.