The three most common contractual disputes

By: Guest contributor

Date: 22 July 2013

The three most common contractual disputes/businessman looking through a magnifying glass{{}}Checking the fine print has always been an essential (if somewhat laborious) task when signing a contract. However, despite best efforts, problems can still occur when a dispute arises between two parties privy to a contract. Here are the three places where contractual disputes are common…

1 Outsourcing

Outsourcing has become common, but all too often the emphasis is on the service provider to deliver. However, the High Court has ruled that in long-term contracts, both parties have a responsibility to “cooperate with each other in good faith”.

What this means in practice is the client company cannot issue overly harsh penalties for minor misdemeanours and must act in a way that is conducive to a healthy working relationship, even if there have been minor failures in the service being provided by the outsourcer.

2 Employment issues

Under UK law, every employee is entitled to receive a basic employment contract within two calendar months. This should cover the essentials, such as working hours, holiday entitlement and pay, as a bare minimum.

However, it is important to understand that clauses do not need to be contained within the written contract to be legally binding. Specifically, if a requirement is patently obvious (eg not stealing), fundamental to being able to perform the duties (eg a driver holding a driving licence) or if it is simply part of well-established company practice, the inclusion in writing is not necessary to make it enforceable.

For this reason, if there is any doubt over what is expected and acceptable, it is imperative to set it out in writing. This overrides the possibility of any ambiguity and ensures the contract is watertight in the event of a dispute.

3 Commercial lease termination

As a business, you may find that you want to terminate your lease before you originally expected, leaving you with the problem of how to escape from the contract.

Prevention is paramount. Most landlords provide the contract wording, so checking it carefully before signing on the dotted line is key.

If you want to terminate your lease, you may find you have a break clause that grants you the right to cancel the lease at certain points of the contract’s duration. If these dates have passed, you may also be able to assign the lease to another party or possibly sublet the premises. Not all contracts permit this, so you will need to check the wording.

If all else fails, negotiating with your landlord may lead you to reach a mutually satisfactory termination agreement, even if the contract holds none of the above clauses.

Conclusion

In any type of contract, getting it right from the outset and making sure it is inclusive and clear, with all terms fully and properly defined should help prevent any disputes in the long term.

Blog supplied by professional writer Sally Wilkinson who works for Tollers Solicitors.

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