Dispute Resolution Clause
(Construction Contract)

Summary

This clause can be included in a construction contract to set forth the required process for addressing a dispute between the parties. This clause includes practical guidance, drafting notes, and an alternate clause. Disputes are common in construction, and planning for them can help both the owner and the contractor minimize the impact. Typical dispute resolution procedures involve steps such as meeting in the field, often followed by meetings between executives who are not involved in the day-to-day operations at the site. Formal mediation is common on construction projects and is frequently included as a prerequisite to litigation or arbitration. Finally, the parties should choose between litigation and arbitration as a final dispute resolution system. If arbitration is chosen, reference the rules under which the arbitration will be held. If litigation is chosen, the court where the litigation should occur needs to be set forth. Under either litigation or arbitration, the choice of law should be included in the contract. See Governing Law and Forum Selection Clause (Construction Contract). For more on dispute resolution see Construction Dispute Resolution Resource Kit. For additional construction resources, including form contracts and drafting guidance, see Construction Contract, Owner and Contractor Agreement Resource Kit and Construction Resource Kit.