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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.

Answer Options
A
File a lawsuit in circuit court
B
Initiate mediation proceedings
C
Stop work until payment is received
D
File a lien immediately

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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