Contract Tips for Avoiding Litigation

Generally, it is in everyone’s best interest to avoid litigation.  Litigation is expensive and time consuming for all parties.  One way to avoid litigation is to draft a contract with the possibility of future litigation in mind.  Even if you think your contract will never be the basis of a dispute that ends in litigation, it is crucial to be prepared for that possibility.

The first important tip for drafting contracts that help avoid litigation is to make sure all possible terms are in a written contract.  Attempting to rely on oral agreements creates an unnecessarily complicated situation and is more likely to end up in extended litigation.  Keep a record of negotiations, drafts of the contracts, and amendments to contracts in case any misunderstandings arise later.

After the agreement is in writing, carefully review each portion of the agreement and ensure all the terms are accurate.  If you see potential misunderstandings, it is best to ask questions and clarify those potentially ambiguous terms from the start instead of dealing with them later.

A fee-shifting provision is often helpful because it prevents frivolous litigation.  If a party knows the non-prevailing party to any litigation will pay all the attorney fees, that party may rethink pursuing litigation.  Other fee-related clauses that may cause a party to rethink litigation include certain waivers, releases, and disclaimers, which depend on the type of contract.

A dispute resolution clause is also recommended in contracts to avoid extended litigation.  Mediation and arbitration are different forms of dispute resolution that can serve as alternatives to litigation.  A dispute resolution clause inserted into a contract requiring mediation before litigation can be helpful in resolving any disputes at a lower cost than litigation.

If you have questions about litigation or drafting a contract to avoid litigation, the attorneys at O’Keeffe O’Brien Lyson Foss in Fargo, North Dakota can help.  To discuss your case contact at 701-235-8000 or 877-235-8002.