Commercial Contract Disputes

Broadly speaking, a contract dispute relates to a disagreement over a contract. A contract dispute claim can arise in a number of circumstances, which we have discussed in more detail below.

Perhaps the most common type of contract claim is a claim for an unpaid debt. For example, Party A agrees to supply Party B with goods for an agreed price. Party A duly supplies the goods, in compliance with the terms of the contract. Party B then fails to pay some, or all of the agreed sum for the goods. Here, Party A may have a claim for an unpaid debt/ breach of contract.

A contract dispute may also arise in circumstances where there is an issue with the way in which the contract was entered into. For example, owing to misrepresentation or fraud on the part of one of the contracting parties, or possibly a mistake.

A dispute may also arise where terms of the contract are potentially illegal/unenforceable, or an event has occurred which has rendered performance of the contract impossible. In legal terms, the latter situation is referred to as frustration. There may also be disagreements in relation to a purported variation of the contract and whether such a variation was made validly.

Before commencing a contract dispute claim, you would first need to send a letter of claim to the opposing party. In brief, this letter sets out a background to the dispute, the basis of your claim and the action(s) required. For example, payment of a sum of money, or to carry out their contractual obligations.

Whilst beyond the scope of these FAQs, you will also need to comply with the relevant pre-action protocol, dependant on the nature of the contractual dispute. In essence, pre-action protocols set out the steps and procedures that must be followed, prior to commencing a contract dispute claim.

Should no response be received to the letter of claim, or it is not possible to reach a settlement with the opposing party, a claim would need to be commenced. In order to start your claim, you will need to draft a claim form and also, particulars of claim. Once these have been drafted, you will need to file them at court. The court the claim is sent to will depend on the value and nature of the dispute.

There are a number of different methods by which you can settle a contractual dispute, without the need to commence court proceedings, or if proceedings have been commenced, without the need for a final hearing. Attempting to settle a matter outside of court is referred to as Alternative Dispute Resolution (‘ADR’). ADR encompasses a number of different means of settling disputes, such as mediation, arbitration, expert determination, amongst others.

It is possible to keep a contractual dispute out of court, by pursuing Alternative Dispute Resolution. In addition to keeping the dispute out of court, it is also possible to keep the terms of any settlement agreement confidential.