Communication and Contracts: How to Prevent a Dispute

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Communication and Contracts: How to Prevent a Dispute

Letter-of-intent

contractUnless you’ve lived under a rock, you’ve heard how important communication is. Some of us have had disputes with friends, colleagues or partners that resulted in frayed or damaged relationships as a result of poor or miscommunication. Similarly, the same types of miscommunications can result in a breach of contract. This is because although we often speak about effective communication, we often let our emotions and egos get in the way of it, preventing us from addressing the other side’s concerns.

From a business standpoint, if you have a contract, whether with a customer, vendor, or whoever, it is important to have procedures in place to deal with that other party. For example, a business may have a contract with a client, but scope of work has changed and now they need to charge more for their services. The problem is that they didn’t effectively communicate this to the other side, resulting in a dispute over the invoice. In this case, it would have been in the business’s best interest to have had clear procedures for modifications of the contract.

This type of dispute happens a lot and although the problem is a legal one the solution is a human one of simply saying, “we need to charge more because things are now different, here’s why we’d like for you in writing to approve this and why it’s so important.” But when people feel blindsided, it’s no longer about money or contracts, it’s about losing a sense of power and trying to regain it. This is why I like to say that some legal problems have human solutions.

Another example of a contractual relationship gone awry is when the terms of a contract are unclear, but the parties involved are eager to get a deal done. In this scenario, parties often jump to the conclusion about what the other side knows what they mean and vice versa all the while not knowing what the language of the agreement means. So, what’s the solution? Speak up! Legal problems may not always have a simple solution, but these types of legal issues have a human solution: communication. Then put those understandings in the written contract as “representations.” But the written contract is only as good as the communication before writing the contract.

The bottom line is that many contract disputes can be avoided with a proper negotiation strategy and clear communication. A good lawyer will draft a contract for you. But a great attorney will dig to understand what the parties’ needs are and what’s really at stake for everyone to get the best negotiation strategy and contract.

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