The amount of money spent on resolving disputes can make the difference between a profitable project and a losing one. Certainly much of that money could be saved if the number of disputes were reduced, and if those that arose were resolved through ADR. This chapter offers suggestions to general contractors on how to take a proactive approach to preventing contract disputes through negotiation and drafting of construction contract documents.
II. Why Contract Disputes Arise
A well-written construction contract usually contains terms and conditions addressing the most foreseeable situations but cannot cover all possible issues that may arise during the life of a project. Thus, when unforeseen problems arise, as they inevitably do, the contract may not provide an answer.
Even when the contract addresses a particular issue, a dispute may arise because the contract lacks clear direction on how to resolve the matter. The contract provision may be vague or subject to different interpretations. Issues pertaining to contract language abound on international projects, where the parties often come from different cultures, or have different beliefs, values, needs and education. Translated contract documents may also produce problems since the translation could be incorrect, ambiguous or influenced by cultural nuances. It also may be interpreted differently than the original text.