Contract Dispute Resolution Is Significant Because There

Contract dispute resolution is significant because there is always a chance there will be a problem with a contract at some point while it is in effect. At that time, there are both administrative and judicial processes that are available for disputing contract problems. These processes can be used to resolve problems with contracts in order to determine who is "right" and "wrong" when it comes to the dispute. By resolving the dispute carefully and properly, the rest of the contract can often remain in effect and part of the contract can simply be modified. If that does not work, it may be possible to nullify and void the contract in a way that is satisfactory to both parties, or to the party that was "in the right" in the dispute over terms and conditions contained within the contract. If one or both parties breaches a contract, it can become necessary for dispute resolution to take place in order to ensure that the parties are being treated fairly and that they are compensated accordingly for the performance they have provided under the provisions of the contract (Lynch, 2001; Schwartz, 2010).

Administrative processes for contract dispute resolution include alternative dispute resolution options like mediation (Schwartz, 2010). Basically, when one uses administrative processes in contract dispute resolution that person (or entity in the case of a company or corporation) is looking for a way to address the dispute without the need to go to court. That makes the administrative process much different than the judicial process. It can cost less, take less time, and be less difficult if both parties to the contract want to resolve the dispute and are open to considering changes and options. The lower cost of administrative processes can really help small companies and individuals settle their differences without the need for lawyers. That is always valuable, because there are many contracts created (and disputed) every year, and a large number of them belong to people who do not have the kind of money it would take to fight the contract in court if a problem arose (ABA, 2011).

With administrative tactics and processes that are used to handle contract dispute resolution, the parties to the contract can work with a mediator or arbitrator in an effort to ensure that they are both being treated fairly and that the dispute comes to an end in a way that all parties to the contract can agree upon and be content with (Lynch, 2001). There will always be a "winner" in these kinds of disputes, but that does not mean that one party will get all of the concessions for which he or she is asking while the other party receives nothing. Most often, administrative processes are designed to be fair and balanced, and that means a better outcome for all of the parties that are attached to the contract. When one factors in the lower cost and shorter amount of time to address and rectify the dispute, it only makes sense that administrative processes would be quite commonly used.

There are also judicial processes that can be used in order to handle contract dispute resolution, including one party taking the other party to court (ABA, 2011). Unlike administrative processes, judicial processes can be time-consuming and very costly to address. That is due to several factors, including the backlog in the court system and the cost of hiring lawyers. If one wants to use judicial processes to resolve a contract dispute, one needs to have the ability to get a good lawyer and the time to wait for a court date, proceedings, and the decision of the judge. This kind of dispute resolution is more common with larger companies that have the kind of funds (and the kind of time) required in order to get through the court system. There is also a higher degree of stress that comes along with this type of contract dispute resolution, and that is something for which the parties to the judicial processes need to be prepared (ABA, 2011). Good preparation goes a long way when attempting to solve a contract dispute, and when creating a contract in the first place, no matter who the parties are and what the contract is designed to address where those parties are concerned.

If administrative processes have been used already and there has been no success with a resolution of a contract dispute, it may be necessary for the parties to that contract to move to the judicial level (Schwartz, 2010). Some contracts are actually written so that administrative processes must come first, and only after they are unsuccessful can judicial processes be employed. That cuts down on the amount of time it takes to resolve disputes, and also helps keep the court system from a more serious backlog than it already has. It is easier on all parties involved if they can simply go to an arbitrator or mediator and discuss their case. Of course, these contracts can be written so that the decision of that mediator is final. Signing a contract that is written that way effectively means that the parties are giving up the right to move the contract dispute to judicial proceedings if they are not satisfied with the administrative proceedings, and some people do not feel comfortable signing such a contract due to limited recourse.