No matter what kind of business you operate, contracts are the key to good relationships with your suppliers, your contract workers, your business partners, your vendors and your customers or clients.
But where you have contracts, you’re eventually going to have contract disputes. Although, the better you are at anticipating problems with a potential contract, the more likely you’ll be able to avoid any serious issues. With luck, you can even resolve the disputes that do happen without resorting to litigation.
So, what are the most common reasons that contract disputes crop up? Here are three of the biggest:
Non-disclosure agreements and similar restrictive covenants
Maybe you have a nondisclosure agreement or a non-compete agreement with a business partner who wants to move on. There may be some significant disagreements about what exactly that means, especially if your erstwhile partner has a brilliant new idea that you think encroaches on your intellectual property rights or would directly compete with your business operations or growth.
Failures to comply with a contract’s terms or conditions
A failure to comply with an agreement can happen for numerous reasons, not the least of which is a simple misunderstanding or mistake. However, when a failure to comply creates a material breach, the expense to your business can be significant. Sometimes there’s really no way to resolve this kind of agreement except by asking the other party to pay up.
Changes in conditions or instructions
This often crops up in construction contracts due to change orders, since they modify the existing terms of a contract and can have a domino effect on timing and costs. Sometimes, not all the parties are in agreement about how change orders are to be handled – and they may not entirely realize the consequences of one.
Not only can contract disputes take up a lot of energy and time, but you and the other party also may not even agree on how the issues should be resolved. It’s helpful to have experienced legal eyes review the terms of your agreement to clarify your options and look for solutions that will, hopefully, preserve the working relationship for the future.