A contractor receives a dispute notice from the owner regarding defective work. The contract specifies mediation before arbitration. What should the contractor do first?
Correct Answer
B) Respond to the dispute and request mediation
When the contract requires mediation as a prerequisite to arbitration, the contractor should follow the specified dispute resolution process by responding to the dispute and requesting mediation as the first step.
Why This Is the Correct Answer
Option B is correct because contracts typically establish a hierarchy of dispute resolution procedures that must be followed in order. When a contract specifies mediation before arbitration, this creates a mandatory sequence that parties must honor. Skipping mediation and going directly to arbitration could result in the arbitration being dismissed or delayed until mediation is attempted. Following the contractual dispute resolution process demonstrates good faith and compliance with agreed-upon terms.
Why the Other Options Are Wrong
Option A: File for arbitration immediately
Filing for arbitration immediately violates the contractual requirement to attempt mediation first. This could result in the arbitration being dismissed or stayed until the mediation requirement is satisfied, causing unnecessary delays and potentially additional costs.
Option C: Ignore the notice until formal legal action is taken
Ignoring the dispute notice is never appropriate and could result in default judgments, waiver of defenses, or escalation of the dispute. Professional contractors must address disputes promptly and follow established procedures to protect their interests and maintain good business relationships.
Option D: Hire an attorney and file a countersuit
While hiring an attorney may be advisable, filing a countersuit without first following the contractual dispute resolution process (mediation) is premature and could be viewed as bad faith. The contract's dispute resolution clause must be honored before pursuing litigation alternatives.
Memory Technique
Think 'Contract = Command' - whatever dispute resolution process the contract commands, you must follow in the exact order specified. Mediation before arbitration means mediation MUST come first.
Reference Hint
Florida Building Code - Chapter 1, Section 113 (Appeals and Disputes) and contract law sections dealing with dispute resolution clauses
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