In the United States, there are many different disputes
which two parties might have over a given contract, and several ways of resolving them.
To begin with, a contract requires a "meeting of the minds". This means that the
parties to the contract must both have roughly the same understanding of what the
contract means and what requirements will be placed upon them. A dispute would surely
arise if Bob Buyer contracted to purchase ten "lambs", intending to use them in a
petting zoo, and Sam Seller, a meat wholesaler, provided ten lambs which were already
slaughtered and ready to be butchered for meat. This is an example illustrating why
those who draft contracts so often demand great specificity of language.
On the other hand, one party might intentionally breach a
contract because they regret the deal that was made or because new information has come
to light. If a contractor agrees to excavate a building foundation for $10,000 in what
he thought was loose soil, only to discover that the location he needs to excavate is
solid granite, he may well refuse to perform the work because of the vastly greater
expense in performing it. He may or may not be legally permitted to do so, but
obviously a dispute will arise.
When such disputes arise,
sometimes a contract will have provisions for dealing with them. The contract may
specify that arbitration or mediation is to be used to resolve issues. These allow the
parties of a contract to remove their issues from the reach of a jury, which is often
seen as a way of limiting ultimate exposure to liability. A mediator will not, after
all, very likely order ten million dollars in punitive damages, something juries are
sometimes wont to do. If no arbitration or mediation is provided for in the contract,
then resolution of contractual issues becomes a matter for the court. One of the
parties will file suit for breach of contract against the other, facts will be
presented, and a verdict or a settlement will be reached.
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