Contract disputes are an inevitable part of business transactions. Whether arising from misunderstandings, non-performance, or breaches of contract terms, these disputes can significantly impact businesses financially and reputationally.

The legal framework in England and Wales offers various procedures and remedies for contract dispute resolution. Resolving contract disputes outside courts whenever possible is always encouraged to save time and resources.

Common Causes of Contract Disputes

Contract disputes in England and Wales often stem from several common issues. Misinterpretation of contract terms due to vague language or inadequate detail can lead to disagreements on the contract’s scope and obligations.

Breach of contract, where one party fails to fulfil their contractual duties, is another primary cause. Differences in contract performance expectations, failure to deliver services or goods as agreed, and disputes over contract termination conditions also frequently contribute to conflicts.

Understanding these common causes can help parties in drafting clearer contracts and adopting proactive measures to prevent and resolve disputes.

ADR for Resolving Contract Disputes

Before escalating to formal legal proceedings, contracting parties are encouraged to attempt resolution through less confrontational means. Initial steps include direct negotiation between the parties to reach a mutual agreement.

If direct talks fail, alternative dispute resolution (ADR) methods can be an effective approach to resolving contractual disputes.

Alternative Dispute Resolution (ADR) methods provide parties involved in a contract dispute with various options to resolve their issues outside of traditional court litigation.

ADR is often preferred for its potential to save time, reduce costs, and preserve relationships between parties. The use of ADR may also be included within a dispute resolution clause within a business contract. The main ADR methods used in resolving contract disputes include:

Negotiation

Negotiation is the most straightforward ADR method, involving direct discussions between the parties (with or without their attorneys) to reach a voluntary settlement.

It offers the greatest flexibility, as there are no set rules or procedures, and the parties have complete control over the outcome. Negotiation can be initiated and conducted at any stage of the dispute.

Mediation

Mediation involves a neutral third party, known as a mediator, who helps the disputing parties communicate and negotiate a mutually acceptable resolution. The mediator does not make decisions for the parties but facilitates discussions and helps uncover underlying interests to find a common ground. Mediation is confidential, allowing for open dialogue without fear of prejudicing future litigation.

Arbitration

Arbitration is a more formal ADR process where the disputing parties present their case to an arbitrator or a panel of arbitrators, who then make a decision on the dispute. This decision, known as an award, is usually a final and legally binding decision.

Arbitration mimics a court trial with more simplified rules of evidence and procedure, and parties can agree on specific aspects such as the governing law and arbitration location. It’s particularly common in commercial contracts through arbitration clauses.

Conciliation

Conciliation is similar to mediation, but the conciliator plays a more active role in proposing solutions and bringing the parties to an agreement.

While the conciliator provides advice and suggestions for resolving the dispute, the final decision to agree still rests with the parties. This method is often used when parties seek a guided resolution process but want to maintain control over the outcome.

Early Neutral Evaluation

Early Neutral Evaluation involves a neutral third party assessing the merits of the case early in the dispute. The evaluator, usually an expert in the law and subject matter of the dispute, provides a non-binding opinion on the strengths and weaknesses of each party’s case. This can help parties develop a more realistic understanding of their positions and facilitate a resolution.

Expert determination

Expert determination is another valuable Alternative Dispute Resolution (ADR) method. It is particularly suited for resolving disputes involving technical, financial, or specialised subject matters where an expert’s knowledge is essential for determining the issue at hand.

This process involves one or more independent experts who are appointed to decide on specific issues in dispute.

These preliminary steps are not only cost-effective but also preserve business relationships by fostering a cooperative rather than adversarial atmosphere.

Remedies to contract disputes

The remedies for contract disputes aim to put the injured party in the position they would have been in had the contract been performed as agreed. The most common remedy is damages, financial compensation for loss or injury suffered due to the breach. Damages can be compensatory, punitive, or nominal, depending on the case’s circumstances.

Specific performance is another remedy, requiring the breaching party to fulfil their contractual obligations. This is typically used when monetary damages are insufficient to remedy the harm. Injunctions, both prohibitive and mandatory, may also be issued to prevent a party from taking a particular action or to compel them to act.

How can ARC Costs assist with contract dispute resolution?

As well as advising and assisting on the legal costs involved in resolving contract disputes, ARC Costs can also introduce you to an experienced commercial contract solicitor who is equipped to take legal action in your best interests.

Our network of specialist commercial law firms are extremely knowledgeable and will provide you with the most appropriate legal advice and assistance. Please note, however, that our panel are unfortunately unable to assist with employment law contracts.

In addition to introducing you to a commercial contract solicitor, we can also assist in the recovery and negotiation of legal costs in commercial cases, whether you are the paying or receiving party.

ARC Costs are highly experienced in advising and assisting with costs issues and disputes in different areas of law. As Costs Draftsman and Costs Lawyers, we can assist you with your commercial litigation costs issues.

To find out more about how we can provide you with assistance, please get in touch with us at 012014 397302 or email one of our expert team at info@arccosts.co.uk. Alternatively, please use our free chat facility to speak to an expert directly.

We may receive payments from third party solicitors on our panel to whom we may refer your claim. We will never charge you for any referrals made to our panel of third parties.