Contracts outline important terms and agreements between parties. A well-written one can prevent numerous arguments and confusion.
However, FindLaw discusses that contract breaches are common, and these occur when one of the parties fails to fulfill one or more obligations outlined in the contract. When this occurs, there are a variety of ways to deal with disputes.
Dispute resolution methods
There are three main methods to deal with breach of contract or other contract issues: Litigation, mediation and arbitration. Litigation is the most well-known, and it involves a judge or a judge and jury. Both sides present their arguments and evidence, and the judge or jury hands down the decision.
Litigation is costly and time-consuming, so many people look for alternative resolution methods. Mediation is one alternative. It involves a mediator, who is a neutral third-party, and this individual leads discussions between the two contesting parties. The goal of mediation is for the parties to come up with a mutual solution together.
Arbitration falls in between mediation and litigation. A neutral third-party, the arbitrator, listens to evidence presented by each side. This individual then issues a binding decision, which means that neither side can appeal the decision.
Include resolution method in the initial contract
Deciding which resolution method to use can lead to additional disputes. To prevent this, the Harvard Law School Program on Negotiation recommends including a dispute resolution clause in the initial contract. Some of these clauses require conflicting parties to attempt a solution via mediation or arbitration first and only go the litigation route if that method is unsuccessful.