Avoiding Contract Disputes With Three Strategies

The business world is filled with agreements, deals, and exchanges. While most business leaders to their best to build trust with clients and other businesses, it has become standard to ensure these dealings with legally binding contracts. A good contract is written clearly, carefully, and with all parties in mind. They can be deployed for just about any circumstance, regarding things such as license agreements, intellectual property, or mergers and acquisitions. No matter the case, or how well crafted a contract may be, they can’t account for every possible scenario. Sometimes, one or both parties fail to adhere to the clauses written within the contract after signing off on it. These instances often result in contract disputes.

What are Contract Disputes?

As just mentioned, contract disputes occur when either party (or both) fails to abide by one or more of the duties stated in the contract. Contract disputes fall under two categories: material breach and minor breach. A material breach is more severe than a minor breach, as it undermines the core agreement(s) of the contract. For instance, a contract might require one party to finish a project by a strict deadline. The other party states clearly in the contract that time is of the essence, but the deadline cannot be met. Since time plays a key role in this agreement and one party has failed to meet this requirement, this is a material breach of contract. This might, however, only be a minor breach if the contract doesn’t specify that time is of the essence, and there has been suitable communication beforehand regarding the delay. This minor breach might result in no repercussions or one party could seek mediation services and sue the other for damages after the fact.

How to Avoid Contract Disputes

No matter the nature of a contract, most people want to avoid a dispute at all costs. These disputes waste time, money, and energy at best, and can end relationships, businesses, or careers at worst. Fortunately, there are several ways to avoid contract disputes. Here are three strategies to prevent them from happening the first place.

1. You Can’t Be Too Clear

Most of us are familiar with the length and legalese of user agreements for websites and apps. Even if most people agree to the terms and conditions without reading them all, these contracts are written very clearly so as to avoid any confusion, loopholes, or misrepresentation. Most legally binding contracts begin with strict definitions of terms. This is done so that any time the term is used in the contract, it can be clearly referenced at all times. The crucial point here is that no definition can be too clear. Brevity might be a journalist’s best friend, but for legal documents it can be fatal. If a term needs several paragraphs to define it in its proper context, so be it. The more detailed the documents, the less room for miscommunication, and the less likely a contract dispute.

2. Keep Time in Mind

This strategy takes into account the duration of a contract. Some agreements only last a week or a month. Others, however, might last years. For contracts with longer durations, time must be kept in mind. The more time passes, the more things change, meaning any contract can find itself in a different context after a year or two. A good way to account for potential variability in technology, terms, and cost is to agree to re-negotiate the contract after a shorter duration of time. Maybe the document is re-examined every year or two years. This way, even a decade’s long agreement can be amended throughout time to serve both parties and a changing world.

3. Get it Notarized

Notarization can provide a great failsafe for contracts. This is the process by which another party (a state or federal representative) witnesses the signing of an agreement and ensures the identities and willingness of both parties to partake in this contract. By notarizing the contract, neither party can claim in court that it didn’t sign the document. Additionally, both parties will probably examine the contract more thoroughly if a third party notarizes it.

Sometimes contract disputes are inevitable. Still, these three strategies provide ways to avoid them and help engender better relationships in the future.