A contract dispute may come in varying shapes and sizes. Whether you are a Government contractor or a Small Business, contracts dispute can take a toll on your work and ultimately cost you money. While the best option is to have an attorney draft or review any contract before signing, in many circumstances that is not an option and the contract is already in place.
If you wish to enforce some portion of your contract dispute, keep in mind that there are very strict statutory deadlines by which you need to file your claim. Missing a deadline equates to no recovery and the dismissal of your case, a very serious consequence.
While the statute of limitations is critical to successful litigation of your matter, there are also practical steps that can save your Company time and cost. Involving a contract lawyer will ensure your legal rights are protected at each step, and alleviate a lot of time expended in reaching a resolution.
General Business Contract Disputes:
1. Mitigate damages:
If your contracts disputes involve any monetary loss, you must try to decrease that cost. For example, if you are a seller and contracted with a buyer who decides not to buy the product last-minute, attempt to resell that product. The majority of Court’s across the Nation agree that a party has a duty to mitigate its damages and will not allow recovery for damages that could have been recouped.
With widespread technological use, miscommunication happens. Be sure to attempt reasonable communication informing the other party of what you believe to be their responsibility. Remember: Over 90% of all contract dispute cases are settled in some form of Alternative Dispute Resolution, so keep communication open if possible; the contract will tell the story.
3. Request a Response:
When notifying the other party about contracts disputes, ask for a response identifying any particular disagreement.
4. Review other contracts in place to find similar issues.
Government Contract Disputes
These types of contract disputes are entirely different and are guided by Federal Statutory and procedural rules. Depending on whether you are a Subcontractor or Prime your remedies and consequences vary and need prompt action to enforce. See additional information about breach of contract damages.
Prime: Claims and Requests for Equitable Adjustments start the process for resolving Government contract disputes.
A Claim, as contemplated in the Contract Disputes Act, has very specific requirements, and requests a contracting officer final determination (COFD) about payment owed or contract interpretation. Upon receiving a COFD, if there is still disagreement, the Prime may then appeal to the Board of Contract Disputes.
Requests for Equitable Adjustments (REA) involve a request to the Contracting Officer for an adjustment to the contract based on equity, or fairness to the parties. This typically arises when the Government orders some change in contract efforts. While an REA can become a contract disputes claim upon the correct language, an REA is typically used informally as a procedure for contract administration. Courts have even held that legal fees incurred in drafting REA’s can be recoverable as part of contract administration costs.
Subcontractors: Subcontractors are typically entitled to the same remedies against the Government as the Prime, with one warning. Everything the Subcontractor does must be in the name of the Prime as the Sub is not a party to the contract with the Government. While the subcontract should delineate the Prime’s responsibility concerning such disputes, this is only helpful if the Government is the bad actor. When the Prime fails to pay; however, qualifying Subcontractors have specific remedies under the Miller Act and the Prompt Payment Rule.
Under the Miller Act, if a Prime fails to pay for ninety (90) days, a Sub may request from the Contracting Officer a copy of the Prime’s certified payment bond. The Sub may then file suit against the Prime’s bonding company for payment.
Under the Prompt Payment Act, qualifying Subcontractors are permitted to gain interest and bring suit for work that has been satisfactorily performed and upon which the Government has already submitted payment to the Prime.
In either the civil or Government environment, an experienced contract disputes attorney can help guide you through the process and set rules in place to protect your business from contract disputes. Call 1-866-601-5518.