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What are contract disputes and how can you avoid them?

A contract serves as a legally enforceable agreement between two or more parties wherein one or all of the parties agree to a set of terms. Contracts must have a legal purpose and be based on mutual agreement and genuine assent; all parties must willingly participate in the agreement. Additionally, contracts must give all parties something in return in exchange for something of value being surrendered. In order to be legally binding, all parties must be competent and of legal age when signing the contract.

While contracts are often fairly straightforward, contract disputes do happen. A contract dispute occurs when any party disagrees with any of the terms or definitions in a contract.

Breach of contract

A breach of contract occurs when any party fails to perform a contractual duty or promise. A material breach is the most detrimental type of breach. When a material breach happens, a contract is irreparably broken because the breach prevented core fulfillment. For instance, if an independent contractor was hired to rebuild your business’s website and failed to complete that task, the contract suffered a material breach. The goal of the contract was a functioning website, which the contractor failed to deliver.

A minor breach of contract is less severe and the central portion of the contract can still be fulfilled. Using a similar scenario, if the same independent contractor built the website but a single page was not functioning correctly, the contractor was responsible for a minor breach of contract. The website was built, but there was a portion that needed to be corrected.

Contract errors and remedies

Contract disputes can also occur when the contract has errors or the parties disagree over the meaning of a technical term. All parties should understand all definitions used in the contract and voice concerns before signing the document. Also, contracts signed under fraudulent conditions, wherein a signer was coerced or tricked, are invalid.

Often contract disputes end up in court and involve monetary damages awarded to a party. In cases where the dispute arose from a simple misunderstanding the contract can be edited to correct any mistakes or unfavorable terms.

Avoiding contract disputes

Misunderstandings are at the heart of most contract disputes. Before signing, make sure all parties understand all terms and conditions and are willing and able to carry out their responsibilities. Having the contract notarized can prevent a party from denying their signature later on. Additionally, have an attorney review the contract before any parties sign. An attorney can spot any potential problem areas and suggest changes. A contract is a legally binding document, so before signing make sure you understand the expectations clearly.

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