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​ What do I do in the event of a contractual dispute?

  • Blog
  • 26 January 2017

A contractual dispute is when a party in a contract has a disagreement concerning its terms or definitions. If handled poorly, contractual disputes can be costly and time-consuming, end up in court and damage a company’s business relationships and reputation. So what should do if you’re on the receiving end of a contract dispute involving your business?

  What do I do in the event of a contractual dispute?

Explaining when a contractual dispute can happen

A contract must include a series of elements to make it valid. There must be a “meeting of the minds” across all these elements, between all the parties involved. So all parties must have a solid understanding of every term in the contract and mutually agree on them. Without this mutual agreement, the contract is not legally valid and can be contested in court.

There are therefore different steps that need to be fulfilled during the formation of a contract. This includes an offer being made, an acceptance of that offer, and a form of payment for the goods or services concerning that offer. It is during these stages that contractual disputes can often develop.

Common types of disputes

In business, a contractual dispute could involve anyone from your employees to your business partners, your clients to your suppliers.

Examples of disputes include:

  • Issues when a party reviews your contract  
  • Issues concerning an offer you’ve made in a contract
  • Disagreements regarding the meaning of a contract’s technical terms
  • Mistakes and errors concerning the terms you’ve addressed in a contract
  • Fraud, such as party claiming they’ve been forced into signing your contract
  • Conflict involving your employees or business partners
  • Disputes where those involved in a contract do not stand by their original agreements made months or years earlier

Disputes can also involve the performance of a party’s duties, or where they have failed to perform their duties, which have been addressed in a previously formed contract. This is known as breach of contract. An example could be a seller failing to deliver goods to a buyer.

Working towards a resolution

In the event of a contractual dispute being made that affects your business, the important thing is to aim to resolve the situation as best you can. It’s wise to also get the best legal support to help you find the right resolution for your business. You should aim to:

  • Find a resolution that isn’t time-consuming and doesn’t affect the running of your company
  • Find a resolution that isn’t costly and doesn’t impact heavily on your company finances
  • Find a resolution that doesn’t result in the dispute going to court to avoid additional costs and time
  • Find a resolution that doesn’t involve more people than necessary to help keep the dispute under control
  • Handle the dispute with care, so not to damage previously existing business relationships and your reputation

Remedies to resolve a dispute

A remedy is a type of compensation given to someone through a legal proceeding, such as to resolve a contractual dispute.

There are two types of remedies: legal and equitable. Depending on the dispute, either of these remedies can be used to find the right resolution, such as during a settlement or in court.

Legal remedies allow a non-breaching party to recover monetary damages, such as an award paid to them from a breaching party for the losses they claim.

Equitable remedies are concerned with finding a solution to resolve the dispute that isn’t related to money. This could include:

  • Cancelling an old breached contract and replacing it with a new one, for example, to clearly address the different needs of each party
  • Rewriting part or all of a contract, for instance, to correct errors or misrepresentation of technical terms
  • Requesting a breaching party to perform their duties, according to a contract. This could include that party providing pre-paid goods or services to the non-breaching party

Getting the right support to handle a dispute

When handled without the right skill, knowledge and approach, a contractual dispute can end badly for your business, causing harm to your relationships, reputation, company operation and finances. So it’s important to have professional support with the right expertise to help things run smoothly, while saving you time, money and stress.

Getting legal support is key during a contractual dispute. An accountant, for instance, can collect and analyse relevant evidence, investigate details, and take time to understand your business. They can also document and report essential information to find the best resolution to conclude a dispute effectively.

How we can help with resolving contractual disputes

At FSB, we provide our members with a legal protection scheme to help and support them and their companies, such as during a contractual dispute. This can help make sure a dispute is resolved effectively, allowing members to get back to running their business.

The service includes:

  • 24-hour legal advice helpline
  • Access to advice from qualified solicitors and barristers 
  • Online Legal Information Hub, which provides a range of support materials 

If you’d like to learn more about how we can help in the event of a contractual dispute, or to find out about our other legal services, please get in touch with our team or visit the FSB Legal Protection Scheme page.

Legal Protection Scheme from FSB

Legal protection covers various scenarios and ensures you and your business are covered

Find out more