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When you conduct business with other companies or your customers, you may use contracts to secure your agreement. Contracts are legally binding agreements where each party makes promises to the other and must abide by the contractual terms. Although contracts help to clarify what you and the parties agree to, there can be times when issues arise and affect business relationships. Where this occurs, you may find yourself in a contractual commercial dispute, most often concerning the contract terms. If so, you will need to take legal advice to resolve it, and one stage in this process is the contractual review. This article will, therefore, explain what it means to review your contract in a commercial dispute.
What is a Contractual Commercial Dispute?
Contractual, commercial disputes can arise in a commercial contract between your business and other companies or consumers. The commercial contract details the terms and conditions of the business activity, including each party’s obligations. Where a contractual, commercial dispute arises, you and the other parties have come to a disagreement about the contract. This can be concerning the contractual terms, for example, or because one party claims the other is not fulfilling their contractual obligations as they should be. There are various types of contractual disputes, such as:
- breach of contract;
- termination of contract;
- interpretation of contract; and
- payment disputes.
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How Should I Review My Contract in a Commercial Dispute?
When you fall into a contractual or commercial dispute during your business activities, you must find a way to deal with it. There are specific steps to dealing with a contractual commercial dispute. As a part of this process, the first action you must take is to review the contract. We explain below what it means to review a contract in a commercial dispute.
What is a Review of a Contract in a Commercial Dispute?
A review of a contract in a commercial dispute involves parties to the disagreement analysing the contract in question. This is the first step to checking that a legally enforceable contract does exist before looking at and resolving the issue concerning it. If the contract is an oral commercial contract or one created through conduct or correspondence, then you will need to look at the information surrounding this, which will help you to identify the contractual terms.
What to Look Out for When You Review a Contract
Apart from checking the existence of a legally enforceable contract, you should use a contract review to identify specific points to resolve the dispute. If a legally binding contract exists, you must find the clause in question, which relates to the contractual commercial dispute. This will allow you to see if, for example, a contractual breach has occurred. It will also enable you to:
- decide how severe this is; and
- see what remedies are available, such as termination or damages for a severe breach.
Before pursuing any formal method of dispute resolution, you need to review your contract for any escalation clause. If it contains one, this will determine the exact procedures where commercial disputes occur. This will likely say that you must try to resolve the commercial dispute before you move on to more formal methods.
Once you have reviewed any escalation clause, you must decide how to resolve the dispute formally. It is essential to look for any binding dispute resolution clause. This will determine the method you must use to resolve the commercial dispute. For example, the contract may that state you must pursue either:
- arbitration; or
- court litigation.
If you choose commercial litigation to resolve your dispute, you need to look for a jurisdiction clause during your review of the contract. A jurisdiction clause will let you know the law that applies to the contract and, hence, the relevant country. It will also guide you to which courts will hear the contractual dispute should you pursue court litigation.
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Key Takeaways
A contract is a legally binding agreement between you and another party, which you must enforce and abide by. However, unfortunately, contrary commercial disputes can arise concerning commercial contracts where you and other contracting parties disagree on something about the contract. When a contractual dispute does arise, you will need to resolve this. This starts by checking you have a legally enforceable contract in place. If so, you need to review it to check how serious it is and any remedies available. When reviewing your contract, you should also look for:
- escalation clauses;
- dispute resolution clauses; and
- jurisdiction clauses.
If you need help understanding what it means to review your contract in a commercial dispute in the UK, our experienced disputes and litigation lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. So call us today on 0808 196 8584 or visit our membership page.
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