Most Common Contract Disputes

Introduction

As much as you may wish that every professional relationship were positive, you and your business will inevitably face conflicts.

However, some of these disagreements can quickly turn into legal battles with angry customers, unreasonable landlords, and disappointing business partnerships if you don’t approach them carefully.

So, to set yourself up for the fewest number of contract disputes possible, it’s best to understand where they may come from, how serious they are, and how to settle them best. Let’s take a look at the seven most common contract disputes and how to avoid them.

Sale of Goods Contracts

Some of the vaguest contracts you can come across will be those surrounding the sale of goods. After all, they seem pretty straightforward—one party agrees to sell their goods to another. Still, some suppliers will take advantage of that fact through intentionally vague language.

For instance, some contracts don’t guarantee that customers will receive the products they bought. In other cases, customers are guaranteed to receive their goods, but they don’t have to be similar to what the seller initially described. Luckily, these disputes are relatively easy to settle or litigate as long as the contract is clear about what products the buyer will receive.

Non-Compete Agreements

Non-complete agreements typically occur between employers and their employees and state that an employee cannot work to benefit a competing business. In some cases, non-compete agreements also specify that the employee cannot work for a competitor for a set amount of time after they stop working for the employer.

Non-compete disputes can be a little more tricky to work with when compared to things like Sale of Goods disputes. Sometimes, the agreement itself is too broad to be enforceable, leaving the door open for former employees to support competitors. In other cases, however, these disputes turn into a long, litigious process in which employers may pursue damages.

Consumer Contract Disputes

Unlike the other disputes on this list, consumer contract disputes don’t require a signature. In fact, every time a business sells a product to a consumer, the two parties enter a contract in which the company promises to give the consumer a safe and functional product in exchange for payment. If the customer receives a product that isn’t functional, the business also commits to providing a full refund.

When a business breaches this contract by selling dangerous products, the consumer is entitled to dispute the contract. It’s generally in your best interest to avoid litigation by trying to settle these disputes outside the courtroom.

Related: How Intelligent Contract Management Helps Shorten Sales Cycles

Commercial Leases

Because of the vast amounts of money that tend to be involved, commercial lease disputes between the businesses that own real estate and companies that rent it are widespread.

Some of the most common causes of commercial lease disputes include issues concerning maintenance and repairs, withholding rent, or assignment issues. In any case, the most critical part of crafting a commercial lease agreement (or any other contract) is to ensure that each party’s rights and responsibilities are clearly outlined and the repercussions they can face for breaching the contract. By making sure that both parties clearly understand the terms beforehand, you can avoid most commercial lease disputes altogether.

Related: 7 Industries That Cannot Do Without Contract Management

Material Breach

A general material breach is a code red in the world of contracts—it means that one party has refused to follow virtually all of the terms in their agreement or failed to perform the essential obligations it laid out. By definition, a material breach is a breach so severe that it renders the contract useless.

Because of their severity, these breaches often end up in the courtroom, as the other party will generally try to collect the damages caused by the breach.

Company Contracts

Whether you’re working with a new marketing firm or are receiving new products from a supplier, your business likely has countless contracts formed with other companies. These are considered company contracts, and a breach in any of these agreements is a company contract breach.

Naturally, these breaches can range from relatively minor to extremely serious and will be handled based on their severity. These breaches can also damage valuable relationships between your business and others, so it’s best to try to minimize their harm through mediation or arbitration.

Think you’ve done all you can to satisfy your contract? Contact Revnue to learn more about our technical due diligence services.

Tortious Interference

Though this isn’t quite a contract breach, it is undoubtedly a serious threat that falls under contract law, and it should be on your radar.

A tortious interference involves two parties with a written contract in place and one outside party. During a tortious interference, the outside party will try to interfere with components of the contract and hurt the relationship between the other two parties.

In cases of tortious interference, one or both parties in the contract can sue the outside party for tortious interference.

Related: Why Legal Teams Love Revnue’s Contract Management Platform

Avoiding Contract Disputes

contract breach or dispute is far from preferable, even in the tamest situations. Luckily, there are simple ways to avoid these disputes in the first place.

The most crucial element of a contract is the way it is phrased. By being meticulous in its phrasing and ensuring that the boundaries of the agreement are clear, you can avoid any potential miscommunications regarding your contract. And, even in cases where it is breached, the other party will find it much harder to ignore the agreement they’ve signed.

Another critical way to avoid these disputes is by using an effective contract management system. By storing your agreements in a contract management system, you can improve security, gather data, and stay up to date with your contracts to ensure that you meet every obligation you agree to. Modern software like Revnue also allows you to simplify the process through technical due diligence services, eSignatures, and an AI-powered contract engine.

Curious about how a more effective contract management system can reduce contract disputes? Contact Revnue today to learn more.

Final Words

Given that contracts are the backbone of any business, it can be disappointing to watch the other party deviate or outright ignore the terms of your contract. Unfortunately, these contract disputes often happen in some of the most common agreements businesses regularly sign. However, by understanding these disputes and taking precautions against them, you can avoid the most egregious conflicts and reserve your energy for the part that matters: running your business.

Written By

Kristina Isagunde

Kristina Isagunde

Director of Operations

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