Relationships work well when communication is prioritized and misunderstandings can come to rapid conclusions. At some point, disputes come up needing extra effort to resolve. Construction disputes can be confusing, time-consuming, and damaging to reputations as well as relationships. Both sides can end up losing money if a dispute carries on into litigation. There are steps you as a contractor can take to avoid a dispute, but if one comes up, you have options.
Keep reading to learn about why construction disputes begin and what resolution strategies are available for you.
Why do Construction Disputes Begin?
Construction disputes begin when two sides disagree about one or more sections in a contract. Some disputes are misunderstandings, whereas others are violations of a contractual agreement. When obligations aren't met, there is going to be a problem. Other reasons for a dispute to come up include:
- Incomplete claims made by one or more parties
- Lack of understanding of milestones
Disputes do not breach most contracts, but they may lead to the end of a contract if not handled. Proactive steps will be necessary to keep the project on track.
Step #1: Negotiation
Negotiation involves an internal dialogue between the two parties. In construction disputes, negotiations will typically take place between the contractor and the owner. The two parties will discuss the misunderstanding and seek to form an agreeable resolution on their own without using outside assistance.
Step #2: Mediation
Mediation involves a neutral third party to help facilitate the conversation between the two parties. Mediation is not legally binding, but it can be helpful and cost and time-effective.
Step #3: Expert determination
The next step up the escalation ladder brings in an expert specializing in the area of dispute (i.e., electrical) to determine a value assessment or investigate a claim. At this stage, the determination is still not legally binding, but it will provide more substantial backing for or against a claim.
Step #4: Adjudication
The next step is similar to mediation, but the adjudicator gives a decision instead of solely facilitating a discussion. An adjudication clause within a contract can stipulate an application to the courts to enforce this decision. Again, this method can be more cost and time effective than more escalated options.
Step #5: Arbitration
An arbitrator is a neutral third party individual with experience relevant to the dispute. The arbitrator will evaluate the evidence, including documents, facts, testimony, and more, to form a decision favoring one side or the other. Depending on the local laws, arbitration can be held legally binding. This method of dispute resolution can be nearly as costly as full legal proceedings.
Step #6: Litigation
As a last resort, litigation will resolve a dispute. Litigation includes a trial, is legally binding, and is enforceable. This resolution approach is the most thorough and complete dispute resolution strategy, but also the most complex, costly, and slow-moving form. Litigation should be your last choice after exhausting all previous options.
Protecting Your Interests with an Experienced Construction Litigator
No one wants deals to breakdown and working relationships to be challenged; these are unfortunately a part of the construction and property ownership business. If you have a construction dispute, make sure to have an attorney experienced in litigation who understands the complexities of real estate and construction law like those at Aldrich Legal Services. We can help you walk you through the dispute resolution process, whether that includes liens, using a third parties assistance, or litigating your case.