What is the cause of disputes and the contractual means use for resolving them?

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krishna-agrawala's profile pic

krishna-agrawala | College Teacher | (Level 3) Valedictorian

Posted on

It is a very general question. There are almost an unlimited variety of disputes that are possible. If we consider the disputes related to contracts only, then also the number of types of disputes and their cause will be so large that it will require perhaps a big research project for compilation and classification. However we can identify two broad cause of disputes. One is some genuine misunderstandings of law, the contract, or the facts on the part of one or more parties in dispute. The other cause of dispute is deliberate desire of one or more parties to gain unjustified benefit at the cost of other parties.

The misunderstanding is caused by insufficient knowledge of law, facts, badly formulated contract, and insufficient attention paid to ascertain and establish the reality of performance of the contract.

I am not sure if it is proper to describe the means of resolving disputes as contractual means. However, the following approach can be adopted to resolve disputes.

  • Formal judicial process.
  • Arbitration
  • Mutual negotiation, discussions and adjustment.
  • Writing off the losses
  • Forcing the other party in to submission
badrlaw's profile pic

badrlaw | (Level 1) Salutatorian

Posted on

In the United States, there are many different disputes which two parties might have over a given contract, and several ways of resolving them.  To begin with, a contract requires a "meeting of the minds".  This means that the parties to the contract must both have roughly the same understanding of what the contract means and what requirements will be placed upon them.  A dispute would surely arise if Bob Buyer contracted to purchase ten "lambs", intending to use them in a petting zoo, and Sam Seller, a meat wholesaler, provided ten lambs which were already slaughtered and ready to be butchered for meat.  This is an example illustrating why those who draft contracts so often demand great specificity of language. 

On the other hand, one party might intentionally breach a contract because they regret the deal that was made or because new information has come to light.  If a contractor agrees to excavate a building foundation for $10,000 in what he thought was loose soil, only to discover that the location he needs to excavate is solid granite, he may well refuse to perform the work because of the vastly greater expense in performing it.  He may or may not be legally permitted to do so, but obviously a dispute will arise.

When such disputes arise, sometimes a contract will have provisions for dealing with them.  The contract may specify that arbitration or mediation is to be used to resolve issues.  These allow the parties of a contract to remove their issues from the reach of a jury, which is often seen as a way of limiting ultimate exposure to liability.  A mediator will not, after all, very likely order ten million dollars in punitive damages, something juries are sometimes wont to do.  If no arbitration or mediation is provided for in the contract, then resolution of contractual issues becomes a matter for the court.  One of the parties will file suit for breach of contract against the other, facts will be presented, and a verdict or a settlement will be reached.

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