An owner disputes a contractor's claim for additional compensation due to design changes. The contract specifies that disputes must first go to mediation, then arbitration. What is the contractor's required next step?
Correct Answer
B) Initiate mediation proceedings
When contracts specify a dispute resolution sequence, parties must follow the prescribed order. Since mediation is specified first, the contractor must initiate mediation before proceeding to arbitration.
Why This Is the Correct Answer
When a contract contains a specific dispute resolution clause that outlines a sequence of procedures, parties are legally bound to follow that exact order. The contract clearly states that disputes must first go to mediation, then arbitration, creating a mandatory procedural pathway. Skipping mediation and going directly to arbitration or court would violate the contractual terms and could result in the contractor's claim being dismissed on procedural grounds. Following the contract's dispute resolution process demonstrates good faith and is required before pursuing other legal remedies.
Why the Other Options Are Wrong
Option A: File a lawsuit in circuit court
Filing a lawsuit in circuit court would skip both the required mediation and arbitration steps specified in the contract, violating the agreed-upon dispute resolution process and likely resulting in dismissal
Option C: Stop work until payment is received
Stopping work until payment is received could constitute a breach of contract and does not address the dispute resolution requirements outlined in the contract
Option D: File a lien immediately
Filing a lien may be a separate legal right but does not satisfy the contractual requirement to follow the specified dispute resolution process of mediation first, then arbitration
Memory Technique
Remember 'Contract Commands Compliance' - when a contract specifies dispute steps, you must follow them in order: Mediation first, Arbitration second, Court last (if allowed)
Reference Hint
Florida Building Construction Standards - Chapter on Contract Administration and Dispute Resolution procedures
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