Contracts play a critical role in any business relationship. They prevent confusion and establish agreements between parties, but they can also trigger disputes. If a party breaches a contract or is attempting to enforce the terms of an invalid contract, legal conflicts can arise.
If you or your business is involved in a contract dispute, you would also be wise to avoid the following common missteps.
- Failing to read the contract: Too often, disputes arise because one or both parties are not clear on the agreement’s terms. While you likely reviewed the document when you signed it, rereading it in the event of a disagreement is an easy way to sidestep a legal battle.
- Believing all breaches are the same: There are two types of contractual terms under Canadian law. A breach of conditions refers to a violation of vital terms in a contract. A breach of warranties is a violation of non-fundamental terms. In cases involving a breach of warranties, non-breaching parties can only pursue damages.
- Seeking an improper or unreasonable result: Not all contract disputes warrant the same outcome. Depending on the issue and the terms of a specific contract, there could be various resolutions. Possible results include financial compensation, the performance of action dictated in a contract or cancellation of the agreement.
- Expecting a courtroom trial: Litigating contract disputes can be necessary for some situations. However, many of these claims resolve outside of court. Alternatives to litigation, including negotiation, mediation and arbitration, are more common ways of resolving contract disputes.
- Proceeding without a lawyer: You probably know everything about your business. However, you may be less familiar with provincial and federal laws. Thus, securing legal guidance can be critical in helping you navigate these complicated matters. Proceeding without a lawyer can result in costly oversights and setbacks.
Contract disputes can be frustrating and complicated. However, you can keep the situation from getting worse by avoiding these unfortunate mistakes.
