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Resolving contract disputes in Ontario

Sometimes, when two parties are working together, a dispute or conflict in understand occurs.  How to resolve a contract dispute in Ontario?

The first step is to check what does the contract say about resolving disputes. If the contract is silent or unclear, you should consult a contract lawyer and get professional help.

Contract issues that might occur

  • Cancellation of contract
  • Breach of contract
  • Contract interruption
  • Exclusion clauses
  • Bidding process
  • Performance of contract
  • Novation of contract
  • Limitation periods
  • Failure to perform
  • Release, satisfaction and accord

What is a contract dispute resolution?

Dispute resolution refers to resolving issues, in this case resolving contract issues with the other party. Depending on the contract and the willingness of both sides to cooperate, dispute resolution in Ontario can end in different ways:

  • resolving dispute through negotiation,
  • alternative dispute resolution (mediation, arbitration) or
  • going to court (litigation).

How to manage contract disputes?

It is highly advised to negotiate with the other party first and avoid going to court. Contract dispute negotiation will save you from additional stress, plus you will save some money and time. Before you meet with the other party, read carefully the terms of contract and consult a contract lawyer.  

If you fail to negotiate with the other party, don’t lose hope. It is common practice for most contracts to have an alternative dispute resolution process that in many cases can resolve the issues so the both parties are satisfied.

With the help of our Toronto lawyer with mediation and arbitration experience, be sure that your contract dispute will be resolved in the best possible way.

Litigation or going to court is the last resort to go to and you should try to avoid it if possible. You will spend much money on court fees and in most cases, there is only one winner in the court. Alternative dispute resolutions that precede litigation are your best chance to close the chapter and come to terms with the other party. Whether or not the contract specifies ADR (mediation or arbitration), you should look to ADR first.

Finding an alternative dispute resolution?

What are the most commonly used methods for resolving legal disputes without litigation?

Mediation is a process when two parties that are having a contract dispute, ask the third person (a mediator) to assist them and help them resolve the dispute. During negotiations both parties may be under a lot of tension and they may tell bad things to each other which can negatively affect the outcome of dispute resolution.

Thanks to a mediator, you will be encouraged to discuss with other party and find a win-win solution. Mediation is not always required but it is always recommended to try it if you are having a contract dispute with another party. You should also know that a mediator will not take part in the final decisions and only you and the other party can agree to settle the dispute.

Arbitration is another alternative dispute resolution. If you failed to settle contract dispute with negotiation and mediation, you can try with arbitration. In complex contract disputes, especially when the contract is silent or unclear, you should look for an arbitrator who will help you resolve the contract dispute without going to court.

If you and the other party cannot even decide about what arbitrator to choose, both parties can choose one arbitrator and then they will choose the third that will lead the arbitration process. The main difference between mediation and arbitration is that the final decision is not yours or the other party’s. The arbitrator makes the decision about the contract dispute based on the contract terms, applicable laws and all other facts.

In some cases, and that depends on the applicable laws, you can decide prior to arbitration whether the arbitrator’s decision will be binding or not.

Unfortunately, in some complex contract disputes that can’t be easily resolved, the only thing that is left is litigation. It is lengthy, time consuming, and typically winner-takes-all.  

In Ontario, if things proceed to litigation, a statement of claim is typically issued in the Superior Court of Justice.  Smaller claims, less than $25K, can alternatively be tried in Small Claims Court.

Advantages of contract dispute resolution

Here are the reasons to choose negotiation, mediation or arbitration to resolve your contract dispute:

  • You will spend less money and time.
  • The relationship with other party may be kept in good faith.
  • You may not lose the contract completely, but have its terms changed.
  • Flexible solutions, more chance to meet the needs of both parties.
  • You will be in more control when it comes to the process of dispute resolution than going to court.
  • Long-lasting agreements, you and the other party may preferably comply with the agreement designed by you than the court.
  • Alternative dispute resolutions are confidential unlike litigation

How to avoid contract disputes in the future?

When signing contract agreements you should consult a lawyer and meet with the other party to clarify all the terms presented in the contract. Sometimes bad communication and misinterpretation may cause contract disputes. It is better to talk with your lawyer and the other party before signing the contract and prevent disputes later. But if the dispute happens, don’t wait too long to consult a lawyer or a mediator.

The above outlines how to handle disputes – but regarding any material issue, obtaining legal advice early in the process can help parties come to a resolution more quickly, and ultimately save time and cost.