What does your Contract say about disputes

Contracts are designed to protect both parties in a business or commercial arrangement, but when a disagreement arises, many people are unaware that their contract may already outline a required dispute resolution process. These dispute resolution clauses are becoming increasingly common in business contracts, construction agreements, and commercial transactions, requiring parties to follow specific steps before taking legal action. 

This article explores why dispute resolution clauses matter, where they are commonly found, and how they can impact your legal options. 

 
 
The Role of Dispute Resolution Clauses in Contracts 

A dispute resolution clause outlines a structured process that parties must follow before escalating a dispute to court. These clauses typically encourage negotiation, mediation, or arbitration as a way to resolve conflicts privately and cost-effectively. 

Where Are These Clauses Commonly Found? 
✔ Commercial Contracts – Many business agreements include dispute resolution steps to avoid immediate litigation. 
✔ Queensland Building and Construction Commission (QBCC) Contracts – The QBCC Act mandates specific resolution processes for building disputes. 
✔ Business Sale Contracts – If a disagreement arises after a business sale, a resolution clause outlines the steps before taking further action. 

 
 
How Do Dispute Resolution Clauses Work? 

A standard dispute resolution clause may include the following step-by-step process: 

1. Written Notice of Dispute 

• One party must formally notify the other party in writing of the dispute. 

• The contract may specify a timeframe for when this must occur. 

2. Negotiation Period 

• The parties may be required to attempt negotiation within a set period (e.g., 5 or 10 business days). 

• Each party typically appoints a representative to handle the dispute. 

3. Mediation (If Negotiation Fails) 

• If negotiation does not lead to a resolution, mediation may be the next step. 

• A neutral mediator helps facilitate discussions to reach a voluntary settlement. 

4. Arbitration or Litigation (Final Step) 

• If mediation fails, the dispute may move to arbitration or court proceedings. 

• Some contracts require arbitration, meaning parties cannot go straight to court. 

Key Takeaway: Before taking legal action, check whether your contract requires negotiation or mediation first. Skipping these steps could weaken your case. 

Why Are These Clauses Included in Contracts? 
✔ They Reduce Legal Costs 
Going to court is expensive and time-consuming. Dispute resolution clauses are designed to resolve conflicts early, preventing unnecessary litigation. 

✔ They Keep Disputes Private 
Court proceedings are public, while mediation and arbitration are confidential. Many businesses prefer to resolve disputes privately to protect their reputation. 

✔ They Speed Up the Resolution Process 
Court cases can take months or even years. Alternative dispute resolution (ADR) methods, such as negotiation and mediation, can resolve matters much faster. 
 
 
Should You Handle Dispute Resolution Alone? 

Many contracts allow parties to follow the dispute resolution process themselves, particularly in the early stages (negotiation or mediation). However, seeking legal advice early is critical to avoid costly mistakes. 
 

📌 Common Pitfalls of DIY Dispute Resolution: 
❌ Conceding too much during early negotiations 
❌ Misinterpreting the legal position of the dispute 
❌ Making settlement offers that weaken your case 
❌ Failing to follow contractual timelines, invalidating claims 

Tip: Even if you choose to negotiate alone, consulting a dispute resolution lawyer beforehand can help you strengthen your position and avoid legal missteps. 

What Should You Do If Your Contract Has a Dispute Resolution Clause? 

If you're facing a dispute under a contract, take these steps before making any legal decisions: 
✅ Step 1: Read Your Contract Carefully 
Check if a dispute resolution process is required before taking further action. 

✅ Step 2: Follow the Required Steps 
Ensure you comply with all contractual requirements (e.g., submitting a written notice of dispute within the required timeframe). 

✅ Step 3: Seek Legal Advice Early 
A dispute resolution lawyer can review your contract and provide strategic advice to protect your interests. 

✅ Step 4: Consider Alternative Dispute Resolution (ADR) 
If your contract requires mediation, arbitration, or negotiation, approach it with a clear strategy rather than reacting emotionally. 

Need Help Understanding Your Contract? 

If you’re dealing with a breach of contract or business dispute, the first thing you should do is review the dispute resolution clause in your agreement. 

🚀 The second thing you should do? Call Vicca Law. 

At Vicca Law, we specialize in civil and business disputes, helping clients navigate contract breaches, commercial disagreements, and dispute resolution strategies. 

💡 Book a free consultation at www.viccalaw.com.au to discuss your case. 

📧 Need immediate assistance? Email lidia@viccalaw.com.au for expert legal advice.