We regularly deal with contract mediation. The most common issues are construction and renovation disputes. These normally occur between contractors and homeowners. We also assist in business-to-business and partnership disputes.
As Bruce Carter of the Victoria Chamber of Commerce says “a poor resolution found quickly is better that a good resolution that takes year”.
Most contract disputes revolve around a breakdown of communication or a misunderstanding of the terms of the contract. Our starting point is to review the contract with each party and isolate where communication broke down. We then look for common ground, and ways to meet each parties needs.
For the homeowner, these disputes are very emotional because it impacts their home. For the contractor, an unhappy client can result in failure to be paid or harm to their reputation. The most common factor in these disputes is a misunderstanding as to the terms of the renovation contract.
Most renovation contracts are cost plus contracts were the head contractor agrees to organize a renovation for a fee based upon the value of the renovation. The fee is normally around 15%. So, if it costs the contractor $50,000 to pay for labour and materials on a project (Cost), they would then charge a management fee of $7,500 (15%) on top of the $50,000. The cost plus the fee would be $57,500.
The inherent problem with most cost plus projects is that the contractor benefits from cost overruns. This often leads to suspicion on the part of the homeowner.
In contract mediation, we work with the parties to build trust and reach resolution. We often find a proper understanding of the cost overage will lead to resolution. We have a background construction which enables us to simply communicate complex construction issues.
In contract mediation, it is always important to have clear understanding of what the contract actually meant. Reviewing not only the contract, but also the communications around the contract can help both parties reach an understanding.
Ultimately, our goal is speedy resolution of contracts disputes, so that both parties can move on with their lives.
The Mediation Advantage
Faster — The process is faster and more meaningful because the parties are working together to find solutions rather “battling it out” in court.
Affordable — Both parties control the process and share in the cost of the mediation.
Confidential — Decisions reached by the parties remain private, unless otherwise agreed.
Improved Communication — The mediation process often builds more effective communication strategies, which lead to reduced conflict and more cooperation.
Flexible — Unlike a court order, the parties can renegotiate their agreement at any time, for the fraction of the cost of returning to court.
Most mediations result in a complete agreement. Those that result in partial agreement still benefit from reduced trial time and cost.