Contract Dispute
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What is a Contract Dispute?
A contract dispute happens when one or more parties disagree on the terms, definitions, and conditions contained within it. In such a case, the contract may be contested in court.
A contract dispute arises between parties in a confidentiality agreement or nondisclosure agreement when information or intellectual property has been shared against the contract’s obligations.
Although contracts are often negotiated, people do not always see eye-to-eye. When there is a breach of contract, or one or both parties disagree on the terms or definitions contained in the contract, a contract dispute can arise.
Here is an article about the legal definition of a contract dispute.
Who Can Dispute a Contract?
Any involved party can dispute a contract, but it generally occurs when one party accuses another of a breach of contract.
Under this breach, one party asserts that one or more parties have not fulfilled their agreement's conditions or have violated previously agreed-upon terms.
All parties can sue one another for damages as the result of a contract breach. In case of a confidentiality and non-compete agreement breach, a party may sue another for using intellectual property or stealing ideas for personal gain.
It is not uncommon for one party to dispute a contract and be countered by the accused party. For example, they may claim that there were limitations to the terms not covered under the initial contract, which renders their actions legal and just.
Ultimately, if mediation cannot occur amicably through an attorney, the contract dispute may go to court.
Here is an article about what constitutes a legal contract.
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How Do You Dispute a Contract?
If you want to dispute a signed contract, you can send a letter of termination to the contract issuer.
In most business contracts, a contract termination agreement outlines the requirements for cancellation. This may include a monetary fee or other requirements, such as removing all references to a business to avoid any future affiliation.
If you deliberately breach a contract, you can face penalties under the contract’s terms and conditions. These vary by contract, and it is not advisable to deliberately breach a signed agreement without first consulting with an attorney.
Working with an attorney who knows contract law well can prevent you from making any big mistakes that result in major financial losses or even legal penalties.
If you are disputing a non-competition agreement, you will need to demonstrate there is no need to enforce such agreement or prove there has been a breach of contract. You may also argue that the terms of a contract were not set for a fair amount of time.
Remember that every contract lays out limitations for its parties to adhere to; if you feel that these terms somehow negatively affect your business’s performance, you may use that defense to justify disputing the contract.
Here is an article that can help you find loopholes in a non-compete agreement.
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Types of Contract Disputes
The most common contract disputes arise from a breach of contract. There are two types of contract breaches to know.
- Material breach: This is a complete breach, meaning the rest of the contract is null and void. Also known as a total breach, a material breach of contract means that the affected parties are no longer required to fulfill their obligations and may decide to sue the breaching party or parties for damages.
- Minor breach: A minor breach of contract does not completely nullify the terms and conditions of the agreement. For example, in a confidential information agreement, a minor breach may result in some damages that a party can sue for compensation. Still, it does not mean the breaching party must no longer uphold their agreed-upon obligations.
It is easy to differentiate between material and minor breach by considering the goals and consequences of the actions. For example, suppose a person or company’s actions alter the goals of an agreement entirely. Then, a material breach is likely to blame.
If a goal is achieved, but it is not done so in an agreed-upon fashion or under false pretenses, then a minor breach has occurred.
There are several other types of common contract disputes you may encounter.
1. Non-disclosure Agreement Dispute
A non-disclosure agreement (NDA), also known as a confidential disclosure agreement (CDA), protects an individual or business’s sensitive information from public knowledge or personal use.
For example, a company partnering with a consultant may have them sign a CDA or NDA to prevent sharing their patented technology or methodologies with others.
A contract dispute can then arise if the contract issuer accuses the signee of sharing, leaking, or stealing information.
2. Consumer Contract Dispute
When consumers purchase a product with a warranty, they expect to be sold an item free of any hazards or defects.
Suppose a company sells a product with a warranty that violates the said warranty. The consumer may sue the company for a breach of contract.
Although it requires no signature, a product warranty is a contract between the seller/manufacturer and the consumer. If a product harms a consumer or does not work according to its promised and advertised standards, consumers may sue for damages.
3. Partnership Dispute
Modern companies rely heavily on partnerships with other businesses. When a company feels its partner has not fulfilled its requirements or otherwise breached a partnership agreement, it may sue for damages.
However, a partnership must have clear objectives, expectations, and requirements in its terms and conditions. Otherwise, it can be difficult for a company to prove that a legal breach has occurred.
This is why measurable objectives are always beneficial in company agreements. It is another reason monetary compensation or data-driven transactions are so common; it is easier for all parties to be held accountable when quantitative figures are used as part of their agreement.
4. Sale of Goods Dispute
Sales of goods contracts between suppliers and merchants are prone to disputes due to their open-ended nature and often vague terms.
In a sales of goods contract, the merchant trusts that the supplier will provide goods to their customers. As a result, disputes over failure to deliver products as advertised or even ship them are highly common between wholesale merchants and their suppliers.
If a product does not arrive in a timely manner, is never shipped, or is significantly not as described (SNAD). A merchant may sue the supplier for a breach of contract.
Here is an article to learn more about civil wrongs and what might qualify as a breach of your contract.
What Causes a Contract Dispute?
Any suspected or potential breach of contract can lead to a dispute. All it takes is one party to believe another has broken the agreement to cause a dispute.
No legal guidelines determine what someone can or cannot take a dispute over. However, to prove their case, the accusing party will need to bring forth a sound argument and any evidence that the accused has violated their agreement.
3 Ways to Resolve a Contract Dispute
There are three ways that parties may go about resolving a dispute. These are:
- Renegotiating terms with a mediator, i.e., an attorney, and revising the contract.
- Mutually agreeing to terminate the contract.
- Suing for damages and compensation in court.
Suppose parties are willing to negotiate, even through their own attorneys. In that case, you may be able to resolve contract disputes without needing to go to court.
How Do You Avoid a Contract Dispute?
The easiest way to avoid a contract dispute is to use a contract lawyer to draw up all agreements before signing.
Sound legal contracts set clear expectations, requirements, and terms for all parties.
Negotiating contracts before signing is also a good way to prevent disputes. If all parties feel that they are receiving a fair and equitable deal, they are less likely to breach the contract later.
Unfortunately, disputes are not always preventable. However, open communication, willingness to negotiate and compromise, and clear termination clauses in all agreements can prevent lengthy disputes.
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ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.
How To Get Quotes For Contract Dispute
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Alan B.
At Barker Law, we provide clients with superior service in trust, probate, and estate matters and litigation, contract drafting and review, outside general counsel services, negotiation, commercial litigation, and regulatory navigation. We confidently handle transactional and regulatory matters for businesses and individuals. As our feedback shows, we excel at meeting and exceeding our clients needs.
Michelle T.
I am an experienced, well-rounded attorney with a background specializing in trusts and estates, contracts and business law. I have extensive experience working with simple contracts all the way up to multi-million dollar deals.
"Michelle drafted an excellent and unique Post Nuptial agreement which outlines a very specific "process" that will be used to divide assets in the event of divorce. Since assets can change value daily, traditional "splitting an asset list" methods are often outdated within a week of signing. Michelle rose to the challenge at a very reasonable price. Other, "meter man" attorneys would have charged at least 5x more. I highly recommend Michelle!"
Daniel K.
I graduated from Yale University magna cum laude, served as a Fulbright Scholar in Italy and attended UC Berkeley School of Law. In 2023, I was named a "Legal Visionary" by the Los Angeles Times. I have broad experience in corporate transactions and in serving as outside general counsel to clients. I started my legal career in Silicon Valley and Hong Kong working on large equity and debt financings and matters for private wealth clients. After returning home to Los Angeles, I advised startup companies with formations, acquisitions and day-to-day matters such as sales contracts and licensing. More recently, I have focused on data, IT and SaaS contracts for both providers and customers. My clients include NASDAQ-listed companies, a top ranked children’s hospital and local startups.
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I have a Juris Doctorate degree from Mercer Law School, and I am an active member of the Georgia State Bar Association. I have spent the last eight years reviewing, drafting, editing, and negotiating hundreds of contracts on a monthly basis, working in-house for a Fortune 500 company. I am a results-driven, self-motivated, experienced contracts attorney with exceptional drafting, research and communication abilities.
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I have been practicing law since 2005 and am licensed in the state of Pennsylvania. I started in Pittsburgh, PA and then moved to Williamsport in 2007 where I have practiced family law almost exclusively since. I am the managing partner /owner of Protasio & Jasper, P.C. I have had multiple Pennsylvania Supreme Court family law cases that have changed the law in Pennsylvania. I pride myself on being able to arm clients with information so that they can make informed decisions about their case.
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My name is Kchris Griffin. I am an licensed attorney practicing Family and Civil Law in Oklahoma. My goal is to help those in need with receiving efficient and effective legal services.
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Drew Melville is a Florida and Massachusetts-licensed attorney with fourteen years' experience in real estate transactions, title insurance and land use. His practice includes all aspects of commercial real estate acquisitions, dispositions, financing, joint venture formation, leasing and land use approvals. Mr. Melville is a title agent for Old Republic National Title Insurance Company, First American Title Insurance Company, and Stewart Title Guaranty Company. Mr. Melville's practice is national in scope, and he brings a creative and solution-oriented approach to his clients' diverse array of real estate investment and development activities in all real estate asset classes. These often include urban infill, adaptive reuse, affordable and workforce housing, historic preservation, sustainable building, brownfield or gray-field redevelopment and opportunity zones. Prior to starting his own firm, he was an in house counsel for the real estate development subsidiary of a large, diversified land and agribusiness company. To date, Mr. Melville has closed over $1.2 billion in commercial real estate transactions.
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Corey H.
Veritas Global Law, PLLC ("Veritas") is a law firm specializing in Life Sciences, Private Equity, M&A, technology transactions and general corporate law. Veritas frequently represents clients seeking cost a cost efficient, on-demand, general counsel in a variety of general corporate law matters, and a range of contracts including NDAs, MSAs, Software as a Service (Saas) agreements. Veritas also represents U.S. and non-U.S. private investment fund GPs and LPs across a broad range of activities with a particular emphasis on private equity, venture capital, secondary funds, distressed funds and funds of funds. Mr. Harris received his LL.M. from the University of California, Berkeley, Boalt Hall School of Law and served as an articles editor of the Berkeley Business Law Journal and was an active member of the Berkeley Center for Law Business and the Economy. Additionally, Mr. Harris also holds a J.D. from Boston College Law School, a M.B.A. from the Boston College Carroll School of Management, a B.A. from Hampton University in Political Science with a minor in Economics and Spanish and a certificate in financial valuation from the University of Oxford, Saïd Business School.
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