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Tips to Settle a Dispute With a Residential Contractor
There are many reasons why there could be a dispute with a residential contractor. In fact, disputes between owners and contractors, contractors and sub-contractors and between them and suppliers of materials are commonplace. This doesn’t mean that disputes cannot be resolved, but it does take some negotiating power and recognition of why the dispute arose in the first place. This article hopes to provide some tips with which a dispute with a residential contractor can be settled.
Common reasons for disputes in the construction industry
This is a list of the more common reasons for a dispute:
- poor contract devised in the first place – not clear enough of targets, commitments, exclusions, costing, payments to be made, etc.
- contractor fails to meet obligations as specified in the contract;
- job not progressing fast enough;
- request for part payments not matching job progress;
- poor standards of construction;
- problems with supply of materials;
- poor quality of materials.
The quality of the original contract is the best way to ensure lack of disputes
The most common reason for disputes is the lack of clear details and conditions as specified in the contract with the residential contractor. Not all contractual arrangements are necessarily going to end in a dispute and many arrangements proceed without any problems arising at all, but well crafted contracts ensure fewer reasons for a dispute than poorly crafted ones. If in doubt before signing a contract, talk to a lawyer about what it is that you want and what should be in the contract you intend negotiating.
Tips for settling a potential dispute
There are four recognized ways of settling a dispute with a residential contractor, each depending on the severity of the problem and whether the dispute can be resolved to mutual satisfaction with the fastest, cheapest and easiest method of resolution. These four methods are basically sequential, so if the first step doesn’t succeed, then the next step should be considered and so on until the dispute is resolved one way or another. The most serious step is that of litigation in which the contractor is sued. This is potentially the most expensive step and is therefore the last to be considered and only when the likelihood that the dispute cannot be resolved any other way is high.
Step 1: Direct negotiation
Most disputes can be resolved by direct negotiation with the contractor. This is where a misunderstanding about the process involved and contractual obligations could be brought into the open and differences discussed and hopefully resolved. Negotiation in this way is certainly the least expensive option, and even if it eventually doesn’t result in a satisfactory resolution at least it brings out the differences held in the dispute more clearly. These need to be itemized and supported with any evidence for why the difference is held so that this can be used in any of the two last steps in the dispute process.
Step 2: Mediation
Mediation is basically a repeat of direct negotiation but is held in the company of a mediator. Mediators are chosen by mutual agreement by both parties in the dispute and are ideally neutral individuals with knowledge of the industry but not tied in any contractual way to either party. Prior attempts at mediation have now become standard requests before any lawsuit is allowed to go to court before a judge or before a trial following the filing of a lawsuit if negotiations break down to the point where the contractor is sued (or for that matter, the other way round!).
Mediation is a voluntary arrangement and does not have the formal background to it that accompanies either arbitration (step 3 below) or litigation (step 4 below). For instance, rarely is evidence for the dispute needed to be produced at mediation. The mediator attempts to get the two parties talking together with the main aim of finding a resolution which may or may not favor one of the two parties or finds a middle ground.
Step 3: Arbitration
Arbitration is a more formal than mediation and the decision made by one or more arbitrators (usually a panel) is often binding, i.e. cannot usually be appealed. Many contracts actually specify arbitration as the preferred method used to resolve a dispute between contractor and client in the belief that arbitration is cheaper and faster than litigation, but this isn’t always the case. Arbitration hearings may in fact go on for several sessions and a binding decision may take weeks or months and end up costing more than taking the dispute to court.
Arbitration, unlike mediation, requires more formal scrutiny of relevant evidence that backs up either party’s reasons for the dispute. Evidence may be in the form of documentation or testimony from either party or witnesses.
Step 4: Litigation
This step is taken when there is no other option as negotiations have broken down, yet the grievance persists. Litigation involves finding a lawyer to help prepare a case against the other party, preparing evidence and filing a lawsuit. The case may still be resolved without having to go to court and incurring extra court costs by pre trial agreement between the parties. In fact, by the time pursuit of litigation is threatened, many, probably most disputes with a residential contractor are resolved without having to go to trial.
If the case does in fact result in a court appearance, it may be overseen by a judge alone or a trial jury. One advantage of litigation for either party at the losing end of a court’s decision is that the case can be appealed if there is a reasonable chance of possible success.