An owner disputes $15,000 in change order costs. The contract specifies binding arbitration for disputes over $10,000. What is the required next step for dispute resolution?
Correct Answer
A) Attempt mediation first, then arbitration if unsuccessful
Most construction contracts require mediation as the first step in dispute resolution before proceeding to arbitration or litigation. This allows parties to attempt resolution with less cost and time.
Why This Is the Correct Answer
Florida construction contracts typically follow a tiered dispute resolution process. Even when binding arbitration is specified for disputes over a certain threshold, mediation is usually required as the first step. This multi-step approach allows parties to attempt cost-effective resolution through mediation before proceeding to the more formal and expensive arbitration process. The $15,000 dispute exceeds the $10,000 threshold, triggering the dispute resolution clause, but mediation must be attempted first.
Why the Other Options Are Wrong
Option B: Proceed directly to binding arbitration
The licensing board handles regulatory violations and licensing issues, not contractual disputes between parties. A $15,000 change order cost dispute is a commercial contract matter that must be resolved through the dispute resolution process specified in the contract, not through regulatory enforcement.
Option C: File a lawsuit in circuit court
While the contract specifies binding arbitration for disputes over $10,000, most construction contracts and Florida law require mediation as the mandatory first step. Proceeding directly to arbitration without attempting mediation first violates the typical tiered dispute resolution process required in construction contracts.
Option D: Submit the dispute to the licensing board
Filing a lawsuit bypasses the contractually required dispute resolution process. Since the contract specifies binding arbitration for disputes over $10,000, litigation is not the proper venue. Courts will typically enforce arbitration clauses and dismiss lawsuits that should go through the contracted dispute resolution process.
Memory Technique
Remember 'M before A' - Mediation before Arbitration. Think of it as climbing stairs: you must step on mediation before reaching arbitration.
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