A contract dispute between a general contractor and a subcontractor can occur for many reasons. The general contractor could accuse the subcontractor of not meeting acceptable standards of quality or not completing the project in a timely fashion.
Since it could take a long time for a case to come to court in California, construction interests sometimes look for alternative solutions to contract disputes.
Mediation and arbitration
The California Courts provide information on alternative means to settle disputes without a trial, a process known as an Alternative Dispute Resolution. Potential advantages of this route include faster settlement, a less formal process and decreased costs. Several types of ADR exist:
- Mediation
- Arbitration
- Settlement conferences
- Neutral evaluations
Mediation, for example, could help a general contractor and a subcontractor agree without destroying a beneficial relationship. This will allow the two parties to work together on future projects. This process works best when both parties want to reach an agreement and they begin at a position of equal power or leverage.
Arbitration makes use of a neutral person known as the arbitrator. This person hears the information from both sides and then makes a decision. The parties can enter into “binding” or “non-binding” arbitration.
Settlement conferences and neutral evaluations
A settlement conference makes use of a judge or a neutral person called the settlement officer. This person meets with the representatives for each party and provides guidance on the strengths and weaknesses of each party’s case. This could result in a settlement before going to a trial.
A neutral evaluation often involves the mediation of complex, technical matters that sometimes arise between construction contractors. Therefore the evaluator typically has experience with the subject matter of the case.
