By Jonathan Schmidt | Law Column
In life, we make certain plans and agreements. Sometimes, if the necessity arises and if both parties feel it is in their best interest, those plans and agreements become contracts. Unfortunately, some of our best thought-out plans don’t always turn out as we envisioned. In some instances, when we thought there was a meeting of the minds, in reality there wasn’t. Or, perhaps two people initially had the same goals when entering into the contract, but circumstances changed.
For any number of reasons, contracts often are made and broken. Certain matters that were believed to be clear become foggy. Terms are disputed. What constitutes complete performance is debated. In those instances, the parties may have difficulty in resolving their disputes. When they do, one option is to take the other party to court. Other options for resolution exist for those who don’t want to enter a lengthy litigation process. Some common methods for contract dispute resolution include:
Mediation is a process in which both parties involved in a dispute agree to meet with a neutral third-party mediator – often another attorney or a retired judge. The person chosen as mediator usually will have training in negotiation techniques, the skills of effective listening, and the ability to articulate and restate the positions of the parties in a way that will help guide them toward a resolution that is satisfying to both. The mediator does not determine a resolution to the matter, but rather assists the parties as they craft their solution. Mediation conferences are often held at a mutually agreeable, neutral location. The parties are present along with their attorneys (if they have them) as well as the mediator. Ultimately, the agreement reached at the end of the mediation is a contract between the parties. Thus, if the contract is breached by one party, that party can attempt to have the contract enforced by a court as they would any other contract.
Mediation has advantages for the parties who choose it. The cost is often less than traditional litigation as mediation is less time consuming and the hourly rate for a mediator can be less than what is traditionally paid to an attorney when a matter is being litigated. Another advantage is that the parties have the opportunity to play a direct role in the resolution of their dispute, which can often help to preserve a better relationship between the parties. In addition, mediation offers confidentiality and ease of scheduling for parties who want to meet at times different than when they would traditionally be in court.
Arbitration works similarly to mediation, though at the end of the process, the arbitrator issues a decision that is legally binding. In some ways, it is similar to litigation (though less formal) and typically occurs more quickly. Arbitration comes about when both parties agree to it – either before or after a legal dispute arises. Often, “agreement to arbitrate” clauses are included in a written contract agreed to by both parties.
Arbitrations can take many forms, although in most cases, the complaining party will send the other party a notice setting forth the basis of their dispute and stating their intent to arbitrate it. The other party will then have time to respond, after which time arbitrators will be selected and a time and place for a hearing will be set. Arbitrations may be presided over by a panel of arbitrators or by one arbitrator, and the rules of the arbitration can vary widely – often being determined by the arbitration contract between the parties.
Often, the arbitration process can involve components similar to a trial in a courtroom, with evidence being presented by both parties, witnesses called, and arguments being made. These components are often simplified in some manner, however, to make an arbitration less costly and time consuming than a traditional courtroom trial. Following the required hearings, the arbitrator will usually issue a ruling to the parties within a predetermined period of time. Depending on the rules and type of the arbitration, the ruling may be final, or the parties may have the opportunity to appeal.
Collaborative law is another method of dispute resolution. Typically, the parties and their attorneys commit not to litigate and to work toward a resolution without going to court. Methods that encourage settlement by design are encouraged and the parties typically meet with their > attorneys in a series of “four-way” meetings where negotiations take place. Parties will discuss and agree upon the rules of the collaborative process, identify their interests and goals, explore options for resolution, and determine the terms of a resolution, which is ultimately reduced to a settlement agreement. The collaborative process is confidential and the terms of the settlement are in control of the parties.
Ultimately, the court system is available to all who have a dispute and are willing to pay the costs and expend the time required to do so. Litigation is often the best option for parties who have expensive matters with many disputed issues and are unable to resolve them in another way.
The options for contract resolution can be as different and varied as the personalities, interests, and goals of the parties seeking the resolution. What might be best in one situation, might not necessarily be best in another. Consulting with an attorney or a trusted advisor about the best option to fit your needs is a wise decision as you move toward resolving your dispute. •