Introduction

Contracts are supposed to keep everyone on the same page, but sometimes things don’t go as planned. Maybe a supplier misses a deadline, a client refuses to pay, or your business partner decides they’d rather take a vacation than deliver on their promises. Whatever the issue, a contract dispute doesn’t always have to end with you and the other party duking it out in court.

In fact, going to court should often be your last resort. Court cases are expensive, time-consuming, and can damage relationships beyond repair. Fortunately, there are smarter ways to resolve contract disputes without getting a judge involved. Let’s explore some practical and less painful alternatives.

Read: The importance of having a dispute escalation process in your contracts

Option 1: Open up lines of communication

The first step is often the simplest: talk it out. Before you reach for a lawyer, pick up the phone or set up a meeting. Misunderstandings are often at the heart of contract disputes. Maybe there was a miscommunication, an overlooked clause, or a change in circumstances that the other party wasn’t aware of.

Approach the conversation calmly and professionally. Clearly explain your concerns, listen to the other party’s side, and see if you can reach an agreement. Sometimes, just having an honest conversation can resolve the issue before it escalates. Remember, you’re both looking to avoid a long, drawn-out battle, so a little goodwill goes a long way.

Option 2: Review the contract together

Next, take a close look at the contract itself. Often, disputes arise because one party misinterpreted or misunderstood a particular term or clause. Sit down with the other party and review the contract line by line. Make sure you both understand the agreement and try to find common ground.

You might discover that the contract is clearer than you thought, or that there’s a clause you hadn’t considered that helps resolve the issue. If both sides are willing to meet in the middle, you can often avoid a trip to court.

Read: How to read business contracts like a lawyer

Option 3: Negotiation and settlement

If a friendly chat doesn’t resolve things, it’s time to negotiate a settlement. This involves both parties coming together to discuss the dispute and find a mutually agreeable solution. Negotiation can be done informally, over coffee, or through a series of more structured meetings.

When negotiating, be prepared to compromise. Consider what’s most important to you and what you might be willing to let go of. Keep the conversation focused on solutions rather than blame. Sometimes, offering a settlement, like a partial refund or an extended deadline, can be enough to keep things out of court.

Option 4: Bring in a neutral third party

When direct negotiation hits a wall, it might be time to call in reinforcements. Mediation involves hiring a neutral third party—a mediator—to help facilitate a conversation between you and the other party. The mediator’s job isn’t to make a decision, but to help both sides communicate more effectively and reach a voluntary agreement.

Mediation can be much cheaper and faster than going to court, and it’s often confidential, which means you won’t have to air your dirty laundry in public. Plus, because you’re working towards a mutual agreement, you’re more likely to maintain a good business relationship afterward.

Option 5: Arbitration—a more formal solution

If mediation doesn’t work, you might consider arbitration. Arbitration is a bit like court-lite. An arbitrator (or sometimes a panel of arbitrators) hears both sides of the dispute and then makes a binding decision. Unlike court cases, arbitration is typically faster, less formal, and private.

One downside? You might not have as much say in the outcome since the arbitrator’s decision is usually final and can’t be appealed. But if you’re looking for a definitive resolution without a lengthy court battle, arbitration can be an excellent middle ground.

Option 6: Consider a contract amendment

Sometimes, the easiest way to resolve a dispute is to rewrite the contract. If circumstances have changed, or both parties realize the original terms are no longer practical, consider drafting an amendment to the contract that reflects the new reality. This way, you can both move forward without the cloud of a dispute hanging over you.

Drafting an amendment can be as simple as adding a new clause or adjusting the timeline. Just make sure both parties sign the updated document, and you’re good to go.

Read: How can I amend a contract after signing?

Option 7: Seek legal advice before it gets ugly

If things are starting to get heated, it might be wise to consult a lawyer before taking any drastic steps. A good lawyer can offer objective advice, help you understand your rights, and suggest the best course of action. They can also assist with drafting negotiation letters or guiding you through mediation or arbitration.

However, hiring a lawyer doesn’t mean you’re going to court. Think of it as having a wise counsel in your corner who can help you avoid litigation altogether.

Read: When should I hire a lawyer for my contract?

Conclusion

Disputes over contracts can be stressful, but going to court should be your last resort. From talking it out and reviewing the contract to mediation and arbitration, there are plenty of ways to resolve conflicts without a judge and jury. Remember, keeping disputes out of court saves time, money, and relationships.

So, next time a contract conflict arises, take a deep breath, consider your options, and try one of these methods first. You’ll thank yourself later for keeping it cool and avoiding the courtroom drama. And if all else fails, you can always call in the pros to help you navigate the tricky waters of contract disputes.

How Cobrief can help with contract review

Reading your business contracts can feel overwhelming as an owner-manager of a small to medium-sized business. That’s where Cobrief comes in. Cobrief helps business owners and operators review their business-to-business contracts for legal risks.

Upload your contract to Cobrief's AI contract review software, click review and you’ll get a list of all the risks, in plain English. This helps you decide whether to sign, negotiate or reject the terms of your contract, or hire a lawyer. Think of it as a heat map for your contracts.

Get started here.