How do I resolve a contractual dispute?

As lawyers we advise clients daily in relation to contracts whether of a business or personal nature and frequently have to deal with disputes arising out of those contracts.

Contracts come in all shapes and sizes, and we all have to deal with them.

What is a contract?

In simple terms, it is a legally binding agreement between two or more parties where one party is to provide goods or services on the basis they will be paid to do so.

It is often said it is just like a promise to do something in exchange for consideration.

A contract can cover anything from a formal written agreement right through to a verbal agreement or even part written and part verbal.

The elements which make up contracts are:

• Offer
• Acceptance
• Consideration
• Intention
• Capacity

Offer and acceptance are straight forward. There must be a proposal and then an agreement to accept that proposal.

Consideration means that something of value must be promised by one party to the other for the goods or services.

Intention requires there that there is an actual intent to enter into a legally binding agreement.

Capacity ensures that the parties have the legal ability to enter in an agreement.

The High Court of Australia uses a test of ‘essentiality’.

The test considers the contract as a whole and its individual terms to determine if a party would not have entered into the contract without substantial performance of the term.

In Australia, contracts are primarily governed by the common law (which is the body of law primarily developed through judicial decisions rather than statutes).

Increasingly statutes are supplementing the common law of contract in the areas of consumer protection, construction, employment to name just a few.

What do I do if I have a dispute over a contract?

The first and most important thing you should do is to try everything possible to avoid litigating in the court system.

Litigation is expensive. It can be lengthy and often very stressful notwithstanding that the Australian court system is considered to be fair and impartial compared to other jurisdictions.

In saying that, it is always important before you go into any form of resolution process that you know your legal rights.

The most effective way of resolving a dispute is to talk to the other parties and be transparent in disclosing your grievances.

Many contracts have a dispute resolution process which will often start with the parties being required to talk to each other first with a view of trying to resolve the dispute.

Be proactive and respectful when conducting these discussions, but make sure you know your rights.

If talking the problem through does not resolve the dispute, consider engaging a third party to mediate the dispute.

Often an experienced mediator can give an objective assessment of the dispute and consideration to the barriers to resolving the dispute, thereby plotting a path forward.

Another form of dispute resolution is arbitration, where the parties agree to be bound to the finding of a third party appointed to resolve the dispute.

Arbitration can often be expensive and lengthy.

As indicated above litigating through the courts or tribunals should be the last resort.

Most states and territories have low cost tribunals which can be used to resolve smaller monetary and other disputes, otherwise you will have to resort to state or federal courts which have different jurisdictional limitations depending on the quantum of the dispute or the type of dispute.

Courts can award damages, require a party to fulfil their obligations or grant injunctions to prevent a course of action.

Whilst the basis of the contract is the starting point, certain behaviour can allow a party to bring an action outside of the terms of the contract for:

• Misleading or deceptive conduct. A contract cannot exclude liability for misleading or deceptive conduct under the Australian Consumer Law.
• Unfair contract terms. A term of a consumer contract or small business contract can void if the term is unfair; and was not in the required form.
• Penalties. A clause that will impose a detriment on a party if that party breaches the contract or upon some other event, and the detriment imposed is out of proportion to the interest being protected, thereby making that clause unenforceable.
• Industry specific laws. Some areas of the law have specific legislative rights or protections from a regulatory context.

How can FC Lawyers help with a contractual dispute?

Our experienced business, corporate and litigation lawyers have been assisting clients for over 30 years to resolve disputes relating to their business and personal contractual issues.

You need to be proactive when faced with a dispute so you can have the best chance of resolving it at an early stage.

Contact our team to discuss how we can assist you.