When two parties are signing a contract, they don’t tend to think about the possibility of a dispute. However, disputes can arise at any time if parties aren’t on the same page.
Having a contract in place can help prevent disputes before they arise, but only if disputes are provisioned for in the contract effectively.
What are the common causes of a dispute?
The most common issue associated with a construction dispute is late payments. If payment terms are not clearly laid out in contracts, parties can face some ambiguity on their obligations.
Additionally, changes in scope which create variations can cause disputes. If changes to plans are handled informally, there can be disputes over extra costs and timelines.
There could also be issues with poor quality of work and substandard materials that can cause disputes over who is responsible for fixing any issues.
Finally, contract ambiguity can lead to disputes, as poorly drafted contract terms can cause conflicting interpretations of each party’s legal obligations.
There are some ways to mitigate these issues, though.
What clauses in a contract can help to reduce disputes?
Specific clauses within a construction contract can help prevent disputes from arising in the first place.
Clear and detailed clauses help make sure that all parties understand their responsibilities, reducing the risk of misunderstandings or disagreements.
For example, a scope of works clause should clearly set out what work is included in the contract and what is excluded. This can minimise disputes over additional work or changes to the project.
A payment clause is also important because it should explain the amount to be paid, payment dates, and the procedure for dealing with late or disputed payments.
Variation clauses can establish how changes to the original work must be requested, agreed and priced.
Contracts can also include extension of time clauses, which set out when a contractor may be entitled to additional time due to delays outside their control.
Finally, a dispute resolution clause can provide a clear process for resolving disagreements through negotiation, mediation, adjudication or arbitration before the matter develops into a more serious dispute.
Overall, clear, specific and well-drafted clauses can reduce uncertainty and provide a clear framework for dealing with potential problems.
How can we help?
Getting the right contracts in place is imperative to reducing the risk of disputes and ensuring that any issues can be managed effectively if they arise.
Our team can assist you in drawing up contracts, reviewing contractors and assisting you in negotiating changes to any unfair terms, which enable you to minimise the risk of disputes occurring.
Should a dispute arise, our team can assist you through adjudication and, if necessary, litigation.
Get in touch with our team to learn more about how contracts can help to avoid a dispute.