What are some steps that construction professionals can take to avoid contract disputes?
Contract disputes are, unfortunately, a common occurrence in the construction industry. This applies to both the commercial construction field as well as smaller construction companies that deal with public projects or house builders, for example. The result of a contract dispute can lead to a delay in the project, unexpected costs, relationship degradation with other companies, contractors, and clients, and in some of the worst cases, can lead to legal troubles and litigation.
The most effective way to avoid contract disputes, other than simply not entering a contract, is the creation and understanding of the contract itself. Understanding of the contract by the owner, contractor, subcontractors, and anyone else that is involved, is incredibly important for all parties to execute a successful and dispute free project. Creation of the contract, regardless of the party that is drafting the document, is an important step that can mitigate the chances of dispute. By ensuring the contract is written clearly, has all potentially ambiguous language defined or clarified, and is as complete as possible can lead to less chances of dispute. According to (Semple, Hartman, & Jergeas, 1994), construction contracts are usually extensive and lengthy documents which if one party feels that the contractual obligations or expectations have not been met, and they feel they deserve monetary and/or compensation, a claim will most likely follow.
Depending on the size and the risk of the contract that is being presented, a construction professional could also employ the services of a legal professional to determine if the contract has loopholes, ambiguous or confusing language, and appropriately addresses important topics such as dispute resolution, indemnity, responsibility, and expectations. Ensuring there is no room for misinterpretation is integral to avoiding disputes as often the courts will side with the party that did not draft the contract, provided a valid claim can be brought to the table and proven that a misinterpretation was possible. By simply going over the contract in detail with the owner or other involved parties can often clear up much of misunderstandings and hopefully avoid the lengthy process and unguaranteed results that litigation brings. According to (Lavigne, 1993), relying on the legal system to judge and resolve a contractual problem is counterproductive to getting the job done, is extremely time consuming, and very expensive for all involved parties.
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