Causes and Cases of Contract Disputes
Below are examples of major issues that lead to contract disputes.
Vague or Ambiguous Contract
It is important to write a contract that is concise and has clear terms and conditions. Having a contract that cannot be easily read or understood may lead to major building disputes. For example, clauses or terms that have double meaning and are not clearly defined in the contract cause misinterpretation and often lead to contract disputes. That’s why you should always check back on your agreements with the other party and make sure you are both on the same page before finalising your contract.
Breach of Contract
If a builder, subcontractor or any party to the contract fails to comply with their obligations as described in the contract, then the other party will most likely file a complaint. This could be due to failure to perform within the specified timeframe, or failure to adhere to plans and other specifications in the contract.
No Dispute Resolution Provisions
Always expect that problems will come your way at any phase of your building project. It is always best to think ahead, to consider dispute resolution processes between the parties, and to include some sort of dispute resolution provisions in your contract.
Claims Errors and other Variations in Contract
A claim is a written demand by one of the parties to the contract seeking payment, adjustments in contract and other concerns. Other variations to contract obligations made along the way, especially when it comes to costs and expenses, may also cause disputes in the future even when a building project is finished.
Claims Errors and other Variations in Contract
A claim is a written demand by one of the parties to the contract seeking payment, adjustments in contract and other concerns. Other variations to contract obligations made along the way, especially when it comes to costs and expenses, may also cause disputes in the future even when a building project is finished.
Other Cases of Contract Disputes
Always remember that having a good contract is essential before starting a building project. A construction lawyer can help you all throughout the entire process, starting with drafting your initial contract until enforcing your legal rights. Here are a few examples of cases pertaining to contract disputes.
Sample Case 1:
A builder claimed that they were a licensed builder and could operate on a home building project with a contract that exceeds $500,000. After the building project was done, the homeowner and a building consultant found out that the builder was unlicensed and could only work to a maximum value of $6,000, but had already received $300,000 as payment for their work. The homeowner has lost a significant amount of money, has trouble locating the builder, and cannot recover the money. This could have been easily prevented if the contract between the homeowner and the builder is compliant with construction laws.
Sample Case 2:
A contract was both agreed upon by the homeowner and the builder. Along the way, they both changed some terms in the contract and accepted those changes. When the project was completed, the homeowners were happy with the outcome of the work and builder’s performance. However, the homeowner noticed and did not like the balustrades that were built. The homeowners sought for a refund of the variation amount, and insisted that those were different from the contract. The builder argued that the homeowner shouldn’t be entitled to a refund since there was no loss of amenity. Nevertheless, the case was resolved and the homeowners won and got the requested refund.
Having a well crafted written contract will help you avoid or identify problems early in the project and resolve building disputes later on. Some examples of building disputes are:
Delays in building work
Quality of finished construction work
Poor communication between the builders, suppliers, and owners
Payment conflicts
Inclusion and variations
Badly-written contracts, plans, and documents
Neglect
Errors in building design
Building Defects
Structural defects
Contract Clauses That You Should Always Be Aware Of
What you write in your construction contract is really important because it is legally binding to all parties. When it comes to avoiding contract disputes, you should always be aware of the clauses and terms that are included in your contract. Before starting your building project, make sure that the contract includes the following.
- Statute of Limitations Clause
- Time of Performance Clause
- Termination Clause
- Variation Clause
- Payment Clause
- Dispute Resolution
To know more details on important construction clauses that you should now, read here.
Resolving Contract Disputes and Prevention
Nobody likes disputes, especially when it’s taking most of your time and money. However, some disputes are unavoidable. The best way to deal with them is to be proactive in checking the possible cause/s of the dispute based on your contract and having a plan to resolve it.
Here are some methods that you can use in resolving disputes:
- Conciliation
- Mediation
- Arbitration
- Litigation
In preventing disputes, these known methods in your contract are important. You can also include the following clauses in the contract to identify possible disputes and quickly resolve them, or to obtain compensation for damages and losses.
- Dispute Avoidance Processes (DAP)
- Building Inspections
- Building Insurance
- Building Warranties
If you are unable to resolve the dispute through the methods provided in the contract, there are two governing bodies in Victoria that handle building dispute resolutions. They are The Victorian Civil and Administrative Tribunal (VCAT) and the Domestic Building Dispute Resolution Victoria (DBDRV). If you want to read more about the resolution processes in contract disputes, click here.
Need Help?
Our construction lawyer can help you draft your contract in accordance with construction laws, specify contract dispute clauses, or help you in dispute resolutions and make sure your legal rights are enforced.
