What is a Contract Dispute?
So, what is a contract dispute? Simply stated, a contract dispute arises when the parties to an agreement have very different interpretations of their respective rights and liabilities pursuant to – or based upon – that contract. Or, put another way, it arises when there is a breach of a contract, whether in regards to its formation, justification, performance or which party is liable, and how much, for that breach.
There can be many common types of disputes pertaining to particular contracts. Contract, or breach of contract, cases can arise between corporations or businesses. Corporations enter into contractual agreements with other corporations for the purposes of obtaining services, providing legal counsel or accounting services , or engaging in joint ventures or partnerships. Business contract cases can also arise between a corporation and another organization, entity or individual who sells products or manufacturers goods for which they make a purchase. Additionally, a business contract case can arise between two or more parties (business or individual) who enter into a contract pertaining to the sale or exchange of services or goods.
As contract litigation pertains to personal agreements, individuals may also require the assistance of a contract litigation attorney for concerns such as loan agreements, the purchase or sale of real estate or property, lease and rental agreements, intellectual property infringement and/or misappropriation, as well as lawsuits regarding the transfer and sale of goods, services or real estate.
Why You May Need a Contract Dispute Attorney
Your contract dispute is far too important to resolve by yourself—even an attempt to negotiate on your own can be costly. When you get an attorney on board to help you with the dispute, you’re paying for years of experience and trained expertise. You’re also getting an understanding of contract law and negotiation strategies that you can’t find on Google. Your attorney knows how to interpret the contract with the best outcome in mind for you.
Still, there are several reasons why it’s a good idea to work with an ethical business attorney who has successful experience with contract disputes.
- Contract law is a complicated subject, one that few people deal with on a daily basis. Even large corporations rely on contract dispute attorneys for guidance during negotiations and since drafting contracts, in order to limit the chances of a dispute escalating to an unnecessary level.
- A contract dispute attorney will help you avoid unnecessary conflict that will consume precious time on both sides. Properly and effectively handling a dispute can save you money and time that can then be applied to other aspects of the case.
- Having a solid plan of action from the very start keeps the process organized and makes sure all important points are covered when it’s necessary to go to court.
- Your attorney can ensure all legal aspects of the dispute are handled appropriately to your advantage. There are often clauses or other details which can change the few dollars at stake into a few thousand, or a few million.
- Many contracts contain arbitration and mediation clauses which may limit the amount of financial recovery available, if any.
- Contract disputes don’t have to go to court; arbitration and mediation are often more cost-effective options.
- Even if you do reach an agreement outside of court, you will want an experienced contract dispute attorney to draft and review the final agreement to ensure all terms are beneficial to you.
Characteristics of a Good Contract Dispute Attorney
When looking for a good contract dispute attorney, be sure they have the following qualities: Experience: Contract disputes can be very complicated, requiring a complete understanding of the legal aspects of these types of contracts. Omissions or errors in choice of words can lead to substantial changes in the conditions of the contract. Negotiation skills: Most disputes arise from some ambiguity or allegation. An attorney who is able to communicate with the parties involved will be able to quickly resolve the dispute with alternative methods to litigation. Specialization: Only work with lawyers who specialize in contract law. They will have the most up-to-date news regarding contracts and have a full knowledge of the problems that can occur and how to best resolve them. Track record: Past successes of a lawyer can be a good sign towards their capabilities.
How Attorneys Handle Contract Disputes
When seeking to resolve a contract dispute, an experienced attorney has several tools at his or her disposal. Dispute resolution may take the form of non-binding negotiation, mediation, or arbitration (also known as a summary jury trial), each of which can be further refined or customized for a particular dispute. If attempts to amicably resolve the dispute are not successful, litigation may be initiated by filing a civil complaint and commencing the court-based process for dispute resolution. Not every process is appropriate for all disputes. For instance, litigation is almost always the costliest and most time-consuming option but sometimes is required because of the level of compensation at stake and/or the nature of the disputes. On the other end of the spectrum, negotiation is typically the least expensive approach and the most informal. However, for disputes that involve tens or hundreds of thousands of dollars or more, helpful leverage in negotiations is often lacking. In some cases, parties will agree to mediate disputes even after litigation has already begun. The court system generally favors this, as it offers an opportunity for parties to amicably resolve their disputes, and typically encourages litigating parties to seek mediation. Mediation may allow parties to resolve complex, multi-issue matters and may save them time and money that would otherwise be spent on a contested litigation process. In the event mediation fails, parties may also agree to undertake an arbitration process to resolve the dispute through the appointment of an arbitrator, a neutral third party hearing the case and rendering a decision. Arbitration is a hybrid process between litigation and mediation. Unlike mediation, it is an adversarial process in which the parties present their respective arguments, witnesses, and documents to support their case. However, the process for conducting an arbitration is less constraining than litigation and rules of evidence do not apply. The arbitrator’s decision is binding on parties and can be enforced in the same way a court judgment can.
Contract Dispute Attorney Fees
Cost of Contract Dispute Attorney: What To Expect
When it comes to hiring a contract dispute attorney, cost can be a major deciding factor. Not to worry; there are plenty of options that are available to meet almost everyone’s budget.
Flat Fees vs. Hourly Rates
One of the first steps you will take to find a contract dispute lawyer is to look at price. Attorneys may charge a flat fee, or hourly fee for services rendered.
A flat fee is exactly what it sounds like. You will pay a specific amount for your lawyer to work for you. This may seem high at first glance, but in the long run, will usually save money. This is because the lawyer and client will have already agreed upon the price and work to have a strong case. Because of this , your attorney is also more likely to return your calls and emails faster than an hourly rate lawyer would.
Hourly fees are charged as they come up. You will receive a bill for how many hours you spent with your lawyer and you will be charged accordingly. If your attorney works on a few things and then helps you with something different all in the same day, you will be charged for that time individually. Many attorneys will keep an eye on their hours, limiting their time to try and make you happy at the same time as saving you some money, but it is rarely as easy as it is with a flat fee.
Flat fees may be better for simple cases, while you may want to go with an hourly rate for more complicated affairs. You’ll need to be more cautious with an attorney on retainer, as you may not know how much you are really spending until they send you a bill in the mail.
Questions to Ask Lawyers
As you meet with potential contract dispute attorneys, it’s important that you ask some key questions to help you determine their fitness for your case. Here are the questions you should make sure to ask:
Have you handled a case like this before?
While the facts and circumstances of your case should always be unique, you want to make sure the attorney you’re considering has experience with cases like yours—and preferably has successfully handled them.
Do you have any client testimonials in support of your case?
If an attorney comes with glowing reviews from previous clients, you can likely feel more confident about hiring him or her to handle your case.
How do you handle fees?
Going into a case with a full understanding of what it will cost you—and what your payment options are—is critical to avoiding any unpleasant surprises later on. You can’t afford to hire a contract dispute attorney if you don’t know how much he or she costs.
How will you communicate case details to me?
Clients should not be in the dark about any part of their contract dispute attorney’s movements in the case. Make sure the lawyer you’re considering has a solid communication plan in place that keeps you up to date about how things are going, and how well the attorney is meeting your expectations.
Contract Dispute Cases and Successes
Consider a case we handled in which a restaurant was sued by its former insurance broker for breach of contract arising out of the loss of business due to Hurricane Katrina. The broker had solicited food and coverage, and had recommended that the restaurant purchase all-risk coverage. The broker collected its commission and then did nothing further. He also neglected to provide the restaurant owner with a copy of the policy until after Hurricane Katrina made landfall. The same day the hurricane struck, the broker informed the policyholder that the policy covered only those losses which he had recommended, such as spoilage of food and loss of profits, but not flood damage. A suit was filed against the restaurant asserting that although the broker had recommended all-risk coverage, it had refused to pay the broker’s commission on the flood insurance which the broker had also brokered. We represented the restaurant . After a week-long jury trial the facts offended the jury so much that they totally exonerated the restaurant, awarded it $1.7 million for its business interruption loss, and assessed the entire commission back on the broker. In another case, a small convenience store was given incorrect instructions which alleged "deals" from its former agent. The agent recommended particularly low deductibles, but the contract negotiated by the agent had very high deductibles (i.e. the insureds paid the first $10,000 per occurrence). The agent convinced the insureds the "deal" was worthwhile and they executed the policy. When called upon to pay the high deductible, the insurer refused, and the insureds were caught between the agent’s advice and the insurer’s refusal to pay. The insureds brought suit against the insurance agency/agent and obtained a judgment of $600,000. The ultimate settlement was around $300,000, of which $225,000 went to the insureds and $75,000 to the attorneys.