A construction or building project is often long and complex, and it often involves close coordination between general contractor and the client contracting the work. To successfully compete a project, a general contractor and client need a clear definition of requirements and explanatory and consistent communications with all stakeholders as well as correct and complete construction plans/documents for the project.
But despite all the best laid plans, construction projects can go sideways or some cases wrong because of fundamental conflicts in design drawings, changes to building plans and increases in cost of materials or other reasons. You can see why a dispute can easily arise between a general contractor and a client.
While disputes in building and construction industry are relatively common, many disputes can be amicably and effectively resolved out of court. Bringing a construction lawsuit to trial often does not serve either side very well because it’s often unnecessary, costly and time consuming.
Fortunately, settlement negotiation, mediation and arbitration serve as alternative methods for resolving these kinds of disputes, so both parties can stay out of court and resume typical business duties.
Prior to filing a claim or complaint, both parties can attempt to resolve the matter in settlement negotiation. In this proceeding, both sides should discuss the specifics of issues in good faith to reach a fair agreement. When the two parties reach a tentative verbal agreement, both parties need to formalize the agreement. In addition, both parties should structure this written agreement, so that if either party fails to meet the terms of the agreement, it is admissible to a court of law.
In many cases, both parties opt for mediation because it’s expedient and less expensive than contesting the matter in court. Both sides agree to hire a fair and impartial mediator, who is typically a lawyer, former judge or trained profession. The mediator structures and advises both sides during this formalized dispute resolution process. Often the mediator presents a middle ground solution that’s agreeable to both sides and then mediator assists in drawing up a binding legal document.
In this type of proceeding, both parties meet with a private judge to bring the dispute to a reasoned settlement. The arbitrator will reveal the specific facts and evidence of the dispute. Some construction contracts contain an arbitration clause, so if a dispute arises, both parties must use arbitration. Both sides often submit their arguments in writing or sometimes there is a deposition, and then the arbitrator makes a final decision.
Litigating a construction lawsuit in court is costly, time consuming and often not productive for a general contractor, company or institution. In most cases, contractors, clients and stake holders do not want to wind up in court, so a negotiated settlement, mediation or arbitration are often best for resolving disputes.