5 Ways to resolve a building dispute with your contractor in the commercial space
Positive relationships in the modern transactional climate are an inherent benefit for your enterprise and these include your business relations with contractors. Due to the nature of building ventures, disputes are an inevitable reality. This means that the ideal method of approaching this issue is focusing on minimisation. Consequently, tailored strategies (developed unilaterally or collaboratively) and streamlined mitigation processes are ideal, providing applicable mechanisms for timely resolution of disputes.
The benefits of timely dispute resolution are voluminous. Examples include:
• Fostering long-term relationships with contractors by reducing total time where friction exists, showing efficiencies and pragmatism
• Maintaining effective resource allocation and expenditure on business operations
• Decreasing the possibility of prolonged litigation
This article will guide you through 5 ways that you can resolve building disputes.
- Always Check Your Contract
Reviewing your contract is the first crucial step in resolving any building dispute with a contractor. Ideally, this would constitute a formal written agreement, avoiding uncertainty of terms and ambiguity. Further, it is a legal requirement to have the contract deduced to writing if the value of the works or goods supplied equal a particular value ($3,300 for residential and $10,000 for commercial). In a situation whereby a document is not produced, reviewing documents such as emails and other communications between you and a contractor regarding the work can assist. This can be a component of various elements that constitute an agreement and will provide insight into the terms.
For example, you may have written or verbal arrangements that set out:
– scope of work;
– pricing of the building project;
– terms of payment;
– variation mechanisms;
– extension of time provisions; or
– project timelines or time frames.
While reviewing your contract or correspondence focus on the disputed issues. For example, if you are unhappy with the services provided by the contractor, read the wording of any clause relating to their obligations for services to see if they have breached your agreement.
Further, check if your contract contains a dispute resolution clause that outlines the steps the parties should follow if there is a confrontation. In the event that it is unresolved, demonstrating that you adhered to stipulated procedures to attempt early finalisation will assist the court and ideally, narrow the array of issues that remain.
- Communicate and Negotiate
Communication is the first step and should not be underestimated when a dispute arises. Being transparent and willing to participate can significantly improve the possibility of reaching a settlement. This method is the most efficient way to settle a dispute while exerting very little impact on your business. Additionally, it indicates that the parties can collaborate in the future, facilitating trust. A useful tactic is for the parties to consider the opportunity cost in their respective positions. This will result in them considering the potential expense in relation to alternative avenues to reach a compromise. Approach any negotiations calmly and professionally.
During negotiations, clearly communicate to your contractor:
– the issues pertaining to the building dispute and where relevant, what service or product they have failed to provide;
– expectations in relation to the work; and
– how the contractor can fix the problem, including a specific time frame.
Allow them a chance to respond. Often, disputes are the result of misunderstandings that can be solved by open communication. This method will most likely retain positive relations between yourself and the contractor.
If initial discussions are unsuccessful or stagnated by lack of participation, you may need a third party to help with more official negotiations. Mediation is a process conducted by an independent person (the ‘mediator’) to facilitate communications between the parties for the purposes of resolving the dispute. Any agreement reached by the parties can be reduced to a written binding document. The contents should consist of:
– The terms of the dispute resolution; and
– signatures by the parties.
Mediation can be a cost-effective option to settle a dispute without relying on court processes.
Another type of dispute resolution mechanism that you and a contractor can adopt to achieve a settlement is arbitration. In contrast to mediation, it increases formality, structure and finality. This is correlated with cost. However, it remains less involved than the judicial system and there is still an element of control by the parties. Accordingly, it can only occur by mutual consent. An independent ‘arbitrator’ acts as a judge to determine a result. Depending on the type of arbitration, the outcome is potentially binding on the parties and is enforceable, similar to a judgment of the court. Therefore, it is prudent to seek legal advice prior to engaging in this process.
As explained, unlike court proceedings, the parties retain control over the various features of the mechanism. For example, they may decide that the rules of evidence do not apply.
- Going to Court
Litigation or court proceedings should be your last resort. It is a time consuming and expensive endeavour. Additionally, there is a considerable extent of uncertainty in the outcome. This also applies to circumstances whereby prospects of success are high.
You can potentially represent yourself in court or a tribunal that exercises judicial power such as the Queensland Civil and Administrative Tribunal (QCAT). However, a solicitor can advise you on your case’s merits, collating evidence and presenting the arguments. If the other party has engaged legal services and you are unrepresented, this can pose a disadvantage.
Depending on the outcome of the proceedings and the conduct of the parties, the court will potentially make an order in relation to costs. This means that one of the entities will be required to pay the legal fees and disbursements incurred in relation to the matter. There are numerous factors that impact the discretion of the magistrate or judge. Therefore, it is critical that professional advice is obtained prior to initiating in this forum to resolve a dispute.
You may be able to resolve many disputes with contractors by clear, calm communication and negotiations. However, in circumstances where this fails, or you feel this method is futile, alternative dispute resolution mechanisms or court proceedings can be utilised. Accordingly,an experienced litigation lawyer can advise you on the best course of action for your business.
If you have any further questions pertaining to dispute resolution and require the services of a lawyer, do not hesitate to contact us.