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Common reasons for contract disputes

On Behalf of | Jun 13, 2022 | Business Disputes

The primary purpose of a contract is to outline specific rules and obligations that should be honored by the parties included in the agreement. Contract disputes may arise if the terms in the contract are confusing or if the agreement is written in a way that is not clear or straightforward. The process of solving contract disputes can be lengthy and expensive, so it is essential to identify these potential causes early and avoid them whenever possible. 

Read on to learn the main causes of a contract dispute.

The agreement was poorly drafted

Every word written in a contract agreement has real-life implications. To avoid making mistakes while creating the agreement, the drafter should have strong drafting skills and be knowledgeable in contract law.

Breach of a contract

It is not uncommon for one party to breach the terms of a contract agreement. While a breach can be solved amicably, problems arise when the breaching party denies their mistakes. The other party members may spend time demonstrating how, where, and when the breach of contract occurred, creating a dispute. 

Exclusion from the contract creation process

All parties in a contract should provide input into the contract terms. It is easy for a dispute to arise if one or more parties were not involved when creating the contract terms. Drafting parties could add conditions that are favorable for some members but challenging for others to follow.

Poorly defined roles

A contract often describes the roles and responsibilities of the involved members. This outline is a vital aspect of a contract since it determines the responsibilities and liabilities of each member. The roles should be well-defined and easy to understand. Poorly defined roles may create conflict as members may have different interpretations.

Technical terminology

Disagreements may also arise if one member interprets the terminology used in the contract in a way that conflicts with other members. Technical terms should be avoided, particularly if the parties come from different backgrounds or professional fields. 

Key elements of a good contract

To avoid these potential areas of conflict, craft your document in an agreeable way for all member parties. A good contract draft should:

  • Avoid the use of overly wordy or technical terms
  • Have clarity in the definition clause
  • Avoid inappropriate online templates
  • Include a checklist of clauses
  • Include a termination clause
  • Avoid bias or one-sided terms
  • Include negotiating terms
  • Be well formatted

By following these best practices, you can minimize potential conflicts with other parties and support the execution of your agreement as originally intended.