What Are Contracts?
Contracts are binding agreements that define the responsibilities of contractual parties. In everyday life and especially in performing a business operation, we heavily rely on contracts in our relationships with clients, employees, partners, and vendors. Contracts provide security and mutual understanding for both parties. Without contracts, our business operations and everyday activities in modern society would have been almost impossible.
For a contract to be valid and enforceable, it has to have certain elements and (in some cases) satisfy a specific form.
The fundamental elements each contract must have are the following: offer, consideration, acceptance, intent, capacity, and legality.
Every contract starts with an offer (a proposal of terms) from one party. Consideration is the reason each party enters into a contract. It must be mutual. Otherwise, the agreement is unenforceable as an illusory promise. Furthermore, the other party has to accept the offer. In addition, each party must have an awareness and act intentionally. There has to be a meeting of the minds between them. Legal capacity is the ability to commit to the terms of the contract. Finally, the terms of the agreement must be legal (they must not violate the law).
As mentioned, some contracts have written forms. In most states, these are marriage, real estate, and guarantees.
A Breach of Contract
Sometimes one of the parties fails to act by the agreement. Actions in opposition to the terms constitute a breach of contract.
A breach of contract occurs when one party fails to uphold their end of an agreement. Depending on the impact on the contract, there are several types of violations: non-material, actual, and material breach of contract. There is also a so-called anticipatory breach of contract.
A non-material breach of contract is a minor breach that occurs when non-compliance with the agreed terms is not critical enough to compromise its integrity. Sometimes it is called a partial breach.
An actual breach of contract (also known as a repudiatory or fundamental breach) occurs when one party deviates from the agreement substantially. It gives the complying party the right to sue for actual damages incurred and compel the performance.
On the other hand, a material breach is a crucial and irreparable breach of the agreement. It has a decisive impact on the existence of the contract. In case of a material breach, the other party has the right to collect the damages.
In addition, there is an anticipatory breach of contract. It exists when one party notices the other that they will not uphold their end of the contract. However, in Florida, the violation has to be material in nature. Otherwise, the other party can argue that a breach did not occur.
Contract Disputes
When a breach of contract occurs, the conventional way of enforcing it is by filing a breach of contract lawsuit initiating court litigation.
In proving a breach of contract claim, it is vital to demonstrate that the contract is a valid and binding agreement between the parties. A non-breaching party must also prove that the other party failed to meet the terms and that such violation resulted in monetary damages for the plaintiff.
Proving breach of contract allegations in a court is exhausting and time-consuming. Sometimes it takes years to enter the courtroom. In addition, fees and court expenses add up during each stage of the procedure: discovery, opening statements, witness examination, and closing arguments. That makes litigation financially draining, too.
As an alternative dispute resolution method, mediation proves to be the most suitable technique for dealing with contract disputes.
Mediating Contract Disputes
As already mentioned, traditional court litigation lacks the most advantages mediation has.
Mediation is a neutral, voluntary, and confidential dispute resolution process. Mediating contract disputes is a time and cost-effective method, unlike litigation.
In mediation, a neutral third person facilitates the negotiations between the parties. The mediator’s role is not to issue a decision to resolve the dispute. By enabling negotiations, the mediator helps the parties explore the causes of the conflict, leading them to a potential settlement.
Unlike litigation, there is no judge or a jury in contract dispute mediation. Instead of the jury acting as a referee of facts and the judge controlling the procedure, the mediator helps the parties bridge their differences and reach an agreement.
One of the dominant features of mediation is its confidentiality. Keeping contract disputes out of public record is crucial in any contractual relationship, especially in business contracts. The disputed parties are both interested in safeguarding their hard-earned reputation. Contrarily, litigation brings a lot of undue publicity.
The mediator conducts the process in a respectful and non-adversarial environment. Without needless vindictiveness, typical for litigation, the parties are more likely to continue their cooperation after the settlement.
There is no discovery, deposition, or witness examination in mediation. Consequently, the expenses are incomparably lower, making the mediation an attractive alternative to costly litigation.
The mediation process consists of private sessions (caucuses) and joint sessions. The mediator first talks to each party separately, going from one room to another to establish grounds for settlement. In joint sessions, parties gather with the mediator in an open discussion.
The final goal of mediation is the reconciliation of the opposing interests. The settlement, if signed, is enforceable as a binding contract.
Contact us
Hal Wotitzky is a Florida Supreme Court Certified Circuit Civil Mediator.with years of experience. His dedication and persistence will bring your contract disputes mediation to the next level. In mediating between the opposite interests, Mr. Wotitzky adheres to the highest ethical and professional standards. Keeping an impartial role and strict confidentiality throughout the entire process is his top priority.
Please call us today and schedule your appointment.