Contract Dispute

Contract Dispute Definition

A contract dispute occurs when any party in a contractual agreement disagrees with any part of the contract's terms or definitions. In order for a contract to be valid in the United States, there must be a "mutual meeting of the minds" so that both parties are aware of the requirements of the contract.

What Is the Difference Between a Material and Minor Breach?

When considering possible contractual breaches, there are two types of breaches. A material breach is when a party fails to perform an essential part of the contractual agreement. The result of a material breach means that it will be difficult if not impossible for the contract to be salvaged. A minor breach occurs when there is a breach of contract by a party, but the breach does not disrupt the contract from continuing.

What Are the Most Common Contract Disputes?

Formation

Many contractual disputes arise from the stage where the contract is being formed. For a contract to be valid, there must be an offer, an acceptance of that offer, and some form of consideration (payment) for the goods or services in the contract. The value paid must be equivalent to the fair market value of the goods or services listed in the contract. Other issues that can occur in the formation stage of a contract are:

  • Offer and acceptance disputes
  • Problems with initial drafting and reviewing of a contract
  • Disagreements regarding the meaning or definition of a technical term in the contract
  • Mistakes about contractual terms
  • Fraud, duress, or coercion against an individual's will

Breach

Once a contract has been formed, there still can be issues with the performance of the parties. If a party does not follow any part of the contract, there is a breach of contract. The question will be how substantial the breach was when a judge is analyzing the contractual dispute and determining whether the contract can continue.

Are There Remedies for Contract Disputes?

Depending on the severity of the contract dispute, there are legal remedies available. Monetary damages usually are one of the most popular remedies that can be awarded to the plaintiff for their financial losses. Equitable remedies can exist where a clause of the contract is rewritten, or a portion of the deal is able to continue in spite of the contractual breach. Usually, parties will choose between either monetary or equitable remedies when trying to resolve a contractual dispute.

How Can I Avoid a Contract Dispute?

In the United States, many contracts do not have to be written down. Contracts can actually be expressed orally. However, to avoid a contractual dispute, it is vital to write down everything on a formal contractual template. Contracts also need to include an extensive definitions section to clarify the meaning of more complex terminology that could lead to disputes later on. The parties also need to have a clear understanding of what they want their contract to achieve. Contracts also need to have a section dealing with contractual disputes and how the parties should proceed in the event of a material or minor breach of the contract. By understanding what the contract is protecting, parties will be less likely to have a contractual dispute. If companies have been working together for an extended period of time, it is essential to have periodic contract reviews for each new contract. Doing so will avoid any confusions related to new policies that have occurred from personnel changes. For more complex contracts, hiring an attorney is always a wise decision to protect the interests of both parties. Contract attorneys will be able to customize a contractual template specific to the industry and agreement between the two parties.

Contract Dispute Glossary Definition

Contract disputes commonly occur from breaching the terms expressed in the contract or a confusion between the parties about specific sections of the contract. Parties wishing to enter into a contractual agreement need to invest time and capital to fully discuss the terms they want to outline in their agreement. By doing so, it will be clear what the contact's purpose is and what each party's expectations are for the duration of the deal. Individuals who invest the time to make clear contractual agreements are far less likely to have contractual disputes in the future.