Contractual Disputes: Our Top 5 Tips on Avoiding the Avoidable

December 8, 2021

Many contractual disputes happen because of poorly worded contracts of the entire absence of one. Our Principal Solicitor, Firas Hammoudi, shares our top 5 tips for avoiding contractual disputes.

For a construct that we may describe without exaggeration as one of the cornerstones of modern society, the contract sure isn’t done justice.

It is incredible just how much we contract on a daily basis in every facet of our lives. From boarding public transport to using our phones, buying our houses, using every conceivable app for every conceivable purpose, the modern contract comes in a variety of complexities. From Terms and Conditions we agree to all the way to formal, 50-pagers we sign for a myriad of activities.

Yet in my practice every single day, it astounds me how often our firm is involved in untangling disastrous contractual conflicts, many of which are entirely avoidable.  

Most of these troubles result from both individuals and organisations entering poorly drafted contracts that lead to an ensuing mess.

Too often, clients come to us after seemingly promising arrangements go pear-shaped, relationships become soured, and where there seems to be no evident solution.

The aftermath can be quite costly. At any particular time, our firm is in the midst of a substantial number of our clients going through the courts that centre on the construction of regrettable and painstakingly avoidable contractual issues.

Reflecting on this, below are our top 5 tips to avoid the avoidable contractual disputes in your everyday dealings.

1 – Document, Document, Document!

Many casual business relationships often see our clients entering into agreements based on a ‘handshake’ agreement.

Often, these ‘handshake’ agreements or ‘gentlemen’s arrangements’ are later amended into poorly written contracts (if at all) – often times functioning more as a supplement to the oral agreement between parties. Other times, the contract is based entirely on this handshake.

Nothing is as disheartening as being told this, especially by clients that are otherwise involved in sophisticated, high-value business deals in other contexts.

What these oral contracts almost certainly lead to is very different, subjective understandings of the various terms of the arrangement.

These often mean the different parties hold certain expectations of each other, many of which will not be met.

This is solved by doing what is at the core of the modern contract: drafting it in detailed, well-written terms.

Write all expectations, all deliverables you require, and how and when these will be achieved. And do the same for your counterparty: make sure your counterparty also knows exactly what they’re getting into.

Without exaggeration, a well-written, thorough contract is the only solution to avoiding most avoidable commercial disasters.

2 – Guaranteeing your contract is correctly drafted

Knowing the importance of having a well-written contract is one thing. Actually putting one together is another.

It is easy to get into the pitfall of believing what you are trying to achieve in a commercial or individual context is straightforward and doesn’t need expert drafting or experience.

But any seasoned lawyer can tell you, this is not the case. Not only can the professionals give you the peace of mind of having a comprehensively written contract, they can also leverage their expertise to secure terms more favourable for you. There is an entire industry (the legal profession) that revolves around contracts for a reason. They are not easy to draft and every word can and does mean something: meanings that have been shaped and fashioned over centuries of legal development. 

The professional input is not only vital to putting the wording of your contract through the stress test of ambiguity, but also extracting optimised value from your intended arrangement; both of these are ingredients for a successful venture or relationship.

3 – Being conscious of your counterparty’s needs

While one aspect of writing a contract is ensuring you get the most out of your deal, considering what is expected of you is just as vital.

The other party to the contract will have specific needs and requirements in mind when entering into a contract with you.

Knowing the ins and outs of the terms outlining these expectations, as well as disciplining yourself to give due consideration to these terms, will result in a satisfactory partnership – something that can also mean favourable conditions in future transactions within this relationship.

4 – Knowing the stakes

In figuring out how closely to analyse a contract, the simple starting point we advise all clients on is to reflect and appreciate in detail the potential consequences of something in the contract not being adhered to, or left ambiguous at their expense.

Know what is at stake and allow the potential costs to you be a motivating force in driving you to be thorough in the often-tedious task of becoming familiar with what your counterparty in this contract expects of you.

5 – Include clear mechanisms to resolving disagreements

Disagreements happen. They are a part of life.

Outlining how to resolve these conflicts is a necessary part of a contract that highlights the difference made by having a professional involved.

Including dispute resolution, governing law and jurisdiction provisions clarify to both parties how and where to look for resolutions when friction arises.

Contractual disputes can be avoided. But they are also a fact of life. If you’ve done all on your part and are confident of having done so, you can rest easy. And if and when something does still go wrong, you can likely be comfortable that the law will be on your side.

If you need legal assistance regarding the terms of a contract or need helping in drafting a holistic one, get in touch with us to see how we can assist you. 

About Us

Circle Bridge Legal is a leading Western Sydney law firm at the heart of Australia’s next growth engine. Located in the hub of activity generated by Sydney’s upcoming second international airport [Western Sydney International (Nancy-Bird Walton) Airport], our ambitions are as grand as our region’s.

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