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How do contract disputes happen?

On Behalf of | Jan 29, 2024 | BUSINESS & COMMERCIAL LAW - Contract Disputes

Not many things are as stressful as getting caught up in a dispute. It doesn’t get any better when the dispute in question is business-related.

Unfortunately, from partners at loggerheads to suppliers who can’t honor their commitments, contract conflicts are not uncommon in the world of business. Understanding how these conflicts happen can help you take steps to either minimize or avoid them altogether.

Here are three leading causes of contract disputes.

1. Breach of the contract

Pretty much every business relationship is anchored in some sort of contract. This binding agreement outlines each party’s obligations and entitlements, articulates how disputes will be addressed and seals off potential loopholes that can hurt either party’s interests. If one party fails to honor their obligations to the contract, they are deemed to have breached it. This is one of the main reasons why disputes happen.

2. An invalid contract

For a contract to be valid and enforceable, it has to be valid. This means that it cannot be one-sided and neither can it contain ambiguous provisions. Additionally, it cannot be a product of any form of manipulation. A contract that is invalid will lead to disputes down the road.

3. Fraud

A contract that misrepresents facts or encourages practices that can cost the business money and reputation will likely lead to disputes. Likewise, fraudulent activities like forgery, theft or practices that amount to conflicts of interest will trigger disputes.

So, what do you do if you are caught up in a contract dispute?

Depending on the cause and impact, you may take the following steps:

  • Seek arbitration per the provisions of the contract’s dispute resolution clause
  • Sue the other party for the resulting losses
  • Vacate the contract

Contracts are essential in the world of business. Find out how you can protect your rights and interests if you are involved in a contract dispute.