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How can construction contracts address dispute resolution?

On Behalf of | Jan 6, 2022 | Construction Law | 0 comments

As a contractor, you understand the need to create a clear contract so you and your client understand your obligations within a project. However, a disagreement may happen regardless of the quality of your contract. Fortunately, you may plan for this possibility by making sure your contract provides options to resolve conflicts between you and your client.

Construction disputes can end up in court, but litigation is not the only way to come to a resolution. You may describe different methods of resolution in your contract.

Ways to resolve a dispute

Construction Executive explains that instead of going to court, a construction contract could allow the parties to undergo arbitration. Unlike litigation, arbitration permits construction professionals to resolve the dispute, with one or more parties acting as an arbitrator. Also, arbitration lets the disputing parties keep the process private.

However, it is unlikely you could appeal an arbitrated decision if it does not go your way. If you want another option, your contract may include alternatives like mediation. This option allows you and your client to work out a resolution with the help of a third party meditator without having an arbitrator or a judge impose a binding decision on you.

Establishing venue and jurisdiction

The method of resolving your dispute is important, but you should also consider the location. Typically, a construction contract will require the resolution to take place in the same area as the construction project. If your contract allows for litigation, establish the venue and jurisdiction of the court that will hear your case.

Being specific about your options may help you avoid unexpected problems that may put you at a disadvantage in a contract dispute. You might diminish the risk of a disagreement by requiring that the losing party in a dispute pay the other side’s court fees and attorney costs. This may motivate your client to seek a less costly way to resolve a dispute or to even avoid it entirely.