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Four Contractual Mistakes

Four Contractual Mistakes

Through working with our clients, we have found that there are certain reasons why contractual relationships fall apart. Negligence and misunderstanding are the title of these reasons that usually cause waste of a party of an agreement’s time. Contracts are not meant for starting a dispute, but in the oppset it is there to tighten a realtionship. Therefore, ADP LAW finds it necessary to point out the most common reasons of why contracts lead into a dispute, four reasons are concluded and they are the followings:

1. Verbal Contract

These cases abound in contracts with small amounts contracts and contracts between two parties, each party or one of them is relying only on trust. However, when the verbal contract put in action, misunderstandings begin to emerg. When one of the parties go to a court, usually they lose their legal position as there is no documentation of the oral contact, therefore, the judge would have no choice but to rely on other unclear aspects to end the dispute.

2. Ambiguity of the scope of work

One of the recurring issues is a dispute between two parties or multiple parties in what is accurate work, for example: the negligence of including a bill of quantities (BOQ) to the contract. The lack of clarity about what the work precacly about, oftenly, leads to a misunderstanding of what is the exact cost of the contract. This usually occurs in constructions contracts. For instance, many contracts does not includ a precise value due to the variability of materials used in a project. Therefore, and to minimize the probability of having a dispute, it is important to clarify the description of the work accurately and to present it to a legal adviser to assess in avoiding ambiguity in contract’s content.

3. Undocumented change orders

A contractor carried out a project to pave the outer area of a company building and the agreement was written and the bill of quantities were documented, however, verbal changes orders where made by company’s representative and the contractor was executing upon that. As a result, and after completing the work, a long-term dispute arose between the contractor and the company on whether or not the company issued written change orders and what were the details of the change orders. No one wants to bear the extra cost, therefore, the company refused to pay for extra work and the contractor had to pursue their payments without written approval of the additional cost.

4. Not claiming dues on time

The delay in claiming receivables on scheduled times often leads to complications when claiming the amounts later due to extended procedures of extracting overdue invoice. Closing accounts is always an issue in most establishments, and it is not wise to accumulate receivables until later. Moreover, late invoicing expose the contractor to a great risk of facing an insolvent debtor.

In conclusion, dear reader, you should be careful when drafting and conducting your contracts to strengthen your legal side.