Contracts are an essential part of operations for New York business owners. But disputes often arise when both parties are not under complete agreement during contract negotiations. A sound contract with details outlining both parties’ rights and responsibilities can prevent many, but not all, disputes. You likely put much thought into drafting a contract that is legally binding, with details that thoroughly explain and outline the terms of the contract. But even the most thorough contract can still come with a dispute or breach if one party is unhappy or not aware of the terms.
Contract negotiations
When creating a contract, it’s important to think of all the possible things that could go wrong. When you know what could happen if someone breaches or disputes the contract, you can include terms that will outline how to resolve those issues. Including safeguards in your contract can help prevent a lengthy and expensive legal battle with the party who is disputing the terms.
Contracts should include a dispute-resolution clause. This clause explains what will happen if one party breaches the contract. Including this provision usually means that both sides must still meet their contractual obligations while a neutral third party investigates the matter. You may also wish to include information about using mediation or arbitration to resolve the dispute. Both methods of resolution can be costlier than litigation.
Preventing contract disputes
When one party breaches a contract, you may face serious financial repercussions. If you include a liquidated damage clause in your contract, the other party will be aware of what they will owe you if they breach the contract. Negotiating this amount upfront can make it easier to resolve the issues if you must go to court.
A dispute prevention clause allows both parties to understand exactly what will happen if one party doesn’t meet the agreed-upon terms. This clause is often part of construction contracts but is becoming more popular in other industry contracts. Including a contingency agreement provides a method for your contract to continue while working out a dispute. This can prevent costly delays and provide a method for the non-disputing party to continue to work toward completing the contract.
Legal ways of resolving contract issues
You can put much time and effort into creating a sound contract that includes methods of mitigating potential problems like a dispute or breach of contract, but no contract is completely undisputable. If you’re unable to resolve your contract issues, litigation may be the next step. While litigation can be time-consuming, having someone on your side who is knowledgeable of New York’s laws can help you resolve the issues at hand.