A business contract is a legally enforceable agreement between two or more parties. We enter into contracts all the time, even if we call them by a different name. This could include a lease, promise, agreement, license, obligation, note or permit. Most of the time, all parties follow through with their agreements, and the contract is never an issue. When something goes wrong, however, a contract dispute could result in a lawsuit.

Contract Disputes

At the time of entering into a contract, the parties involved may have intended to complete their obligations. However, changed circumstances may make it so one of the parties cannot fulfill its obligation or completing the terms of the contract would be more complicated or expensive than initially thought. This can result in a contract dispute. It may also involve a disagreement about what the terms of the contract mean to each party.

In a contract dispute, the parties may disagree on what the contract means, what will happen next or the cost of breaching the contract. At this point, the parties either need to come to a new agreement on what to do going forward, or they may end up going to court to have the law settle their dispute.

Breach Of Contract

A breach of contract can be material or immaterial. An immaterial breach of contract generally involves a minor issue that does not affect the overall purpose of the contract. If the party substantially performs according to the contract, a minor breach may limit the aggrieved party to suing for actual damages, if there are any. However, a material breach allows the aggrieved party to compel the other party to perform according to the contract or award damages based on the breach.

In some cases, it may become clear that one party is not going to complete its side of the bargain. When it gives a clear indication that it will not perform according to the terms of the contract, the other party may seek damages based on the anticipatory breach of contract.

Arbitration Clauses

Many contracts include arbitration clauses. An arbitration clause provides that in the event of a dispute or breach, the parties will go through arbitration instead of immediately filing a lawsuit. Arbitration is a type of alternative dispute resolution to settle a dispute outside the traditional court setting. An arbitrator is a neutral third party who looks at the evidence presented, listens to the arguments of all sides and comes up with a decision for settling the dispute.

Arbitration can be beneficial to both parties. It is generally faster and easier than going through the formal court process. It also allows the arbitrator the flexibility to come up with a solution that offers something to both parties, instead of the winner-take-all result with most civil lawsuits. Arbitration may also allow the parties to keep the dispute and outcome private, without going through public court hearings. However, arbitration does have drawbacks. If you are unsure whether to pursue arbitration, talk to your attorney about whether it is right for you.

Contract Modification

When circumstances change, instead of breaching the contract, the parties may decide to change the terms of the contract. This often occurs when both parties still want to see the deal go through, but a changed situation makes it difficult to go forward with the original terms. Examples could include a home purchase where the buyer's financing has changed, or the seller needs more time to make required repairs.

To modify a contract, the changes must be agreed to by all parties. Some contracts may have requirements to make modifications. If the parties cannot agree on changing the initial contract, then that contract will remain in force unless the parties all agree to cancel it.

Employment Contracts

Employment contracts are also commonly an issue of dispute. An employment contract usually includes the job duties, responsibilities, compensation, benefits, hours, vacation time, breaks and other terms. A dispute over the contract can involve the employer failing to fulfill its requirements or an employee failing to perform according to the terms of the contract.

Some employment contracts include boilerplate language that the employer and employee never really consider, which can create problems down the road. For example, many contracts include a noncompete clause. However, many of these noncompete clauses have been ruled to be unenforceable. In some cases, the employer can be sued for including such language. It is important for employees and employers to understand the language of the contract and what it might mean for them. Your attorney can review any contract you are about to sign and explain problems that may arise given the terms and conditions.

Real Estate Contracts

Anyone who buys or rents property for themselves or their business generally must sign some type of real estate contract. Many rental leases are simple forms printed off the internet. However, the form rental lease may not be appropriate for the renter or the landlord. Unfortunately, the landlord and tenant may not realize there is a problem with the contract until something goes wrong.

Real estate contracts for purchasing a home feature many confusing terms, especially for first-time home buyers. Buying a home is an expensive proposition. Given the high stakes and complex language, it is important for buyers to understand what they are signing, what the terms mean and what might happen if something goes wrong. Talk to your attorney about a home purchase contract before you sign something you don't fully understand.

Businesses involved in commercial leases know how complicated these lease agreements can be. Early business ventures and expanding companies can be dealing with a volatile market. This can make it difficult to predict how their commercial property will work for their business months or years down the road. Disputes involving commercial leases can become complicated and usually end up in litigation. As soon as you think there may be a problem involving your commercial lease, you should talk to your attorney.

Do You Have Questions?

At West, Longenbaugh and Zickerman, P.L.L.C., we will advise you on drafting contracts, contract terms and negotiations, contract disputes, and breach of contract cases. Our team is committed to addressing the individual needs of all our clients and helping them navigate Arizona contract law and contract disputes. Contact our Tucson office today or call us at 520-518-3781.