Contract disputes can arise between you and your business partner, shareholder, employee, supplier or client. These disputes can get out of hand, costing the business significantly. Thus, it’s crucial to understand what causes them beforehand to make informed decisions.
Here are four common reasons contract disputes arise:
1. Ambiguity
Using vague terms is one of the leading causes of contract disputes. Vague language can lead to misunderstandings and different interpretations. For example, if your agreement with a supplier states they should deliver goods without undue delay, you may conflict with them when they take longer than expected, affecting your operations. You should specify the number of days within which the supplier should deliver goods.
2. Disagreements over modifications
When circumstances change, you may want to change the terms of your contract. For example, you may want to add a new clause or omit an existing one. You need to inform the contracting party of any changes before implementing them. And here is where conflicts may start – they may not agree with the changes.
3. Breach of contract
If a contracting party fails to fulfill their obligations or observe the agreement’s terms, they may have breached the contract they signed. Accordingly, conflicts can arise.
4. Force majeure issues
A contract dispute can stem from force majeure (a clause included in a contract to protect parties from liability in the event of an unforeseeable and unavoidable catastrophe). You and the involved party may disagree on how to apply this clause.
If you are in a contract dispute with any party you work with, seek legal guidance to solve it before it negatively impacts your business.