When you enter into a professional contract, you hope everything works out according to plan. Unfortunately, things do not always go this way. If you or the other party encounter problems, a contract dispute may arise. A disagreement about the contract can result in legal complications and financial losses.

Thankfully, there are ways to prevent contract disputes and resolve them when they occur. Here are some proven methods for avoiding and finding solutions to contractual arguments.

Prevention tips

The most important thing you can do to reduce the likelihood of a dispute is to enact a written agreement through a process of negotiation. Document every step of the negotiation as you work on creating the contract. A physical contract that lays out everything in detail ensures many disputes do not even have a chance to surface. This contract should be clear on every specific detail possible, especially when there are any technical words or jargon involved. You should ensure the contract adheres to the applicable laws, rules and regulations.

Resolution tips

There are three main ways to resolve contract disputes:

• Mediation: Mediating a dispute involves a neutral third party that assists both parties in coming to a solution on their own. The mediator never imposes a solution. When mediation works, it can bring about a voluntary and nonbinding consensus.
• Arbitration: Arbitrating a dispute involves a neutral third party serving as a judge who has the responsibility of resolving the grievance. After the arbitrator listens to both sides, he or she makes a legally binding decision.
• Litigation: Litigating a dispute means bringing the issue before a judge (and sometimes a jury). The judge or jury has a duty to consider the evidence on both sides and make a ruling. Sometimes, litigation ends with a settlement before a ruling is even made.

The strategy you use will largely depend on the willingness of each party to compromise.