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Construction contract

Should a Dispute Resolution Clause be included in a Construction Contract?

      Construction projects typically include complex, long-term contracts. There are many reasons for disagreements due to perceived or real violations of a contract, whether it involves a single-family home or a multi-million dollar commercial project. Some common causes for breach of contract disputes are breakdowns in communication, changes in economic circumstances, delays, injuries, updates in construction law, defective materials, technical problems, and force majeure events. Alternative dispute resolution is a method that can effectively resolve conflicts between contractual parties in a timely and economical manner.

   Provisions to address disputes are essential when drafting a construction contract. A dispute resolution clause within a contract details the terms of resolving conflicts. There is an increasing trend in the construction industry, especially for commercial projects, to draft contracts with alternative dispute resolution clauses. Courtroom litigation proves to be a costly, public, and lengthy process that is likely to result in irreconcilable differences between those in conflict. Reaching a compromise without court intervention can often preserve the relationship between the parties. Alternative dispute resolution is generally an expeditious way to resolve conflicts and is more informal than a trial.

Popular Methods for Alternative Dispute Resolution include Negotiation, Mediation, and Arbitration.

   Negotiations are the first step when trying to solve construction issues between industry professionals or property owners. If this is unsuccessful, mediation can be initiated. In contrast to negotiations, a neutral third party mediator intervenes to help those in conflict reach a mutually agreed-upon compromise. Arbitration Code chapter 682 in the Florida statutes governs arbitration. This process also uses a neutral third party; however, that person acts as a judge. Their decisions are generally legally binding. There must be clarity in the language of a contract regarding dispute resolution to settle differences effectively. Dispute resolution clauses have profound implications for the contractual rights and obligations that are enforced.

Common Items to Include in a Contract regarding Dispute Resolution are:

  • One or more conflict resolution methods may be written in the contract, such as utilizing a negotiation approach and proceeding to mediation as needed. If a compromise is not reached, the parties can begin the arbitration process and, if necessary, formalized litigation.
  • It should be documented if the dispute resolution method is a final, binding, and confidential agreement.
  • The third-party negotiator, mediator, or arbitrator that is mutually chosen should be written into the contract.
  • There can be a waiver of rights for courtroom litigation.
  • The formal method to communicate the results, such as the findings, conclusion, and awards, is necessary for the contract.
  • Payment arrangements for a third-party negotiator, mediator, or arbitrator are included in the contract.

The Boutty Law Firm P.A. is a Multi-Service Law Firm Dedicated to Central Florida Communities.

   Our law firm is experienced and skilled in alternative dispute resolution techniques to bring parties in conflict to an agreement. As necessary, we provide innovative and aggressive strategies to resolve differences in courtroom litigation. As the law firm’s founder, attorney Shane Boutty has over twenty years of legal knowledge in the construction industry as a contractor, law professor, and owner of several construction companies. With a background in engineering, Attorney Larry Christopher Tabor brings a unique perspective. He is a Florida Supreme Court Certified Circuit Court Mediator.

The Boutty Law Firm P.A. is located in Winter Park, Florida. We represent construction industry professionals and property owners in small and large construction projects throughout Orange, Seminole, Osceola, and Volusia Counties. Call for an appointment at 407-622-1395 to discuss your concerns. We strive to accomplish your goals with efficient and cost-effective legal solutions.

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