A dispute arises between the contractor and owner over a $25,000 change order. The contract specifies mediation before arbitration. The owner wants to proceed directly to litigation. What should happen?
Correct Answer
A) The parties must first attempt mediation as specified in the contract
When a contract specifies a dispute resolution procedure, the parties are typically bound to follow that procedure. Mediation must be attempted first before proceeding to arbitration or litigation.
Why This Is the Correct Answer
CORRECT_ANSWER - When parties enter into a contract that specifies a particular dispute resolution procedure, they are legally bound to follow that agreed-upon process. The contract clearly states that mediation must occur before arbitration, creating a mandatory sequence that both parties must honor. Neither the dollar amount of the dispute nor the preferences of either party can override the contractual obligation to attempt mediation first. Courts will typically enforce these dispute resolution clauses and may dismiss cases that don't follow the prescribed procedure.
Why the Other Options Are Wrong
Option B: The case can go directly to court since the amount exceeds $20,000
While the contract does specify arbitration after mediation, the question asks what should happen first. The parties must attempt mediation before proceeding to arbitration, making mediation the immediate required step.
Option C: Arbitration must be conducted before any court action
The dollar amount of a dispute does not override contractual dispute resolution requirements. There is no legal threshold that allows parties to bypass agreed-upon mediation procedures based on the monetary value of the claim.
Option D: The owner can choose litigation since they are the paying party
Neither party, regardless of their role as owner or contractor, can unilaterally choose to ignore contractual dispute resolution procedures. The paying party does not have special rights to bypass agreed-upon mediation requirements.
Memory Technique
Remember 'Contract Controls' - when a contract specifies dispute steps, those steps control the process, not external factors like money amounts or party wishes.
Reference Hint
Florida Building Code - Chapter 1, General Provisions, or Construction Contract Law sections dealing with dispute resolution procedures
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