“Contract mediation does not focus on who is right or wrong, but is a way of finding solutions”, says Victoria Lawyer and Mediator Michael Butterfield.
Mediation is often used to correct an error or misunderstanding in a contract. The purpose of mediation can be to repair a contractual relationship, or to end a contract. The application of mediation in a contract dispute reaches far beyond being an alternative to court.
For example, a General Contractor for a home renovation might have a dispute with a homeowner about paint color. Both parties are interested in resolving the conflict. The homeowner wants the renovation completed, and wants their home to look good. The Contractor takes pride in their work, and wants to get paid. There is no right or wrong paint colour; just different perceptions and positions. Neither party is served by terminating the contract. Contract mediation is an effective tool in getting the both parties to work out a solution.
The alternative to resolving the issue is a termination of the contract. This means the homeowner faces delays and additional costs while they find a new contractor. The contractor could have problems getting paid ,and would still have to find other work to replace the lost job. Neither party wins.
Contract mediation can replace resentment with cooperation.
When contracts are damaged, mediation offers a way to minimize the negative impact. Most disputes revolve around a disagreement about cost or quality. Normally one party is refusing to pay. This creates bad feelings that poison any future working relationship.
For example, Company A agrees to buy 200 glasses from Company B for $5 each. Company B delivers the glasses, but Company A says they are poor quality and refuses to pay. Company A then buys 200 glasses from Company C for $7 each. Company B then sues Company A for payment of their account. Company A sues Company B for failing to provide suitable glasses at $5 a glass. Company A sues for the difference between the contract price of $5 and what they actually spent which was $7 per glass.
The quality of Solar Eclipse glasses came into question recently, as consumers were warned about possible “knock offs” selling ahead of the Solar Eclipse on August 21, 2017.
The issue here is perception of quality. Contract mediation does not focus on who is right or wrong. Neither company may be at fault. Company B provided the glasses that they felt were fit for purpose. Company A does not want to pay for something they feel they cannot use.
Within mediation, you look for solutions. One may be to sell the 200 glasses to someone else. Another may be to compromise on the price, or use the glasses in a different way. The parties could decide to split the loss.
The court process takes a very long time. It is expensive, and uncertain. Contract mediation can reduce costs, and lead to a speedier resolution.
There are many ways a Lawyer Mediator can assist in resolving a contract dispute. Even if you decide to pursue a claim in Small Claims Court, our firm can assist with Independent Legal Advice, Negotiation Assistance, and Mediation. This is often referred to as “Unbundled Legal Services” or “Limited Scope Legal Services”.
For more information, please contact our conflict resolution experts. What have you got to lose?
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