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There are a number of different ways of resolving a contract dispute, depending upon the type of dispute and your given situation. Contract disputes are commonly resolved through mediation, arbitration, or other types of negotiation and conflict resolution procedures. Since a contract is a formal legal document, and there are specific rules and laws associated with the enforcement of contracts, a contract dispute may also be resolved in a court of law.
When possible, it is best to attempt to resolve a contract dispute with the person who you made the contract with. This is the most cost effective option for resolving disputes, since you do not need to involve third parties such as attorneys, mediators, and courts of law. However, when parties are unable to agree on how a dispute should be resolved, it may not always be possible to come to an agreement without the help of a third party.
When a contract dispute cannot be resolved amicably, there are a number of different steps you can take. Contracts, as long as they do not violate public policy, will be enforced by a court of law, and penalties will be imposed for failure to fulfill the terms of a contract, or for the "breach" of a contract as it is called within the U.S. legal system. Therefore, you can at times resolve a contract dispute by filing a lawsuit against the party with whom you disagree.
Some contracts restrict your right to file a lawsuit and have your dispute resolved in court. Many contracts contain arbitration clauses, which require that disputes be settled by an arbitrator. In most cases, these arbitration contracts are enforceable, and if you signed a contract that contains one, your only avenue for resolving the contract dispute is to submit the dispute to binding arbitration.
If you are required to submit to binding arbitration, the terms of the contract will usually spell out how the arbitration will work. The arbitrator will usually be someone who works for a professional arbitration service. The contract has to provide for fair adjudication of the issue through arbitration, so this arbitrator must be impartial.
The arbitration will be conducted in a similar way to a court case, in which both sides argue their interpretation of events. The arbitrator will then make a decision and resolve the dispute. Both parties must abide by the arbitrator's decision. In most cases, the parties involved in the dispute will have to pay the arbitrator for their time.
If the case goes to court instead of arbitration, both sides will have the opportunity to present their position on the dispute. The judge or jury will hear the case and make a decision on who is right or wrong. Both parties will be bound by this decision unless they appeal to a higher court.
@Melonlity -- And let us not forget that mediation is a lot cheaper than a lawsuit. If you have to hire a contract attorney and go to court, you could run up a huge legal bill before all is said and done.
Sadly, people turn adversarial in a hurry when contracts go bad. They could often work out their own problems without alternative dispute resolution, court or anything else but they often don't. Strange.
Do you know why contract disputes are often solved through mediation or some other form of alternative dispute resolution? Because most contracts have a mediation clause built in that states any disputes over the contract should be resolved through some form of alternative dispute resolution.
A lot of people try to avoid that clause and file a lawsuit. In a lot of states, a court will refuse to hear a case until mediation has been tried if one party moves for that decision.
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