Articles > Small Business

How Do I Handle a Dispute with a Contractor?

December 14, 2020   Philip EvangelouPhillip Salakas

Handling a dispute with a contractor is never an easy task for any business owner, but it likely to arise at some stage in the course of business.

Taking the First Step in a Dispute with a Contractor 

Firstly, it is important that both you and the contractor know the terms of the agreement you are disputing. As a business owner, you need to state clearly exactly what you are disputing to your contractor and why.

Whether you are disputing the price of a service or issues with the quality of work done by the contractor. Making your concerns clear to the other party during a business dispute is key to getting an issue resolved. 

Initially, a good first step could involve inviting the contractor to a formal meeting. This will allow you to raise your issues clearly with them in a formal setting. It is never advisable to threaten legal action at this phase or to use an aggressive tone. It is usually better to give your contractor the necessary time to respond and attempt to rectify the issues. A formal meeting can give both sides an opportunity to negotiate and voice their concerns is key. This also shows that you have initiated a meeting and have both put your concerns on the record. 

You should familiarise yourself with the contract’s dispute resolution clause if you are not already.

Alternative Dispute Resolutions Methods

You may wish to consider using the following options when resolving a dispute – and your contract with the provider may require it.


Mediation is a form of dispute resolution which doesn’t necessarily involve lawyers. It is important to note, that the use of a third party mediator does not provide a legally binding decision. Rather a mediator considers both sides of the dispute and encourages the parties to reach a mutually beneficial solution. The meditator will consider all forms of evidence brought forward by both parties and try to form a dialogue that can resolve your dispute. The meditator can either sit down with each party separately or together and will usually give his/her proposal on how to settle the dispute. Also, make sure to compile and have ready any forms of the evidence whether that be emails, text messages, photos of the contractor’s work or past agreements. 


Arbitration is a more formal way of settling a dispute and it involves seeking advice from a third party called an Arbitrator. The key difference between Arbitration and Mediation is that an arbitrator can make a legally binding decision. Just like a mediator, an arbitrator will thoroughly exam any evidence and materials on both side and reach a decision. This decision is legally enforceable meaning the arbitrator will hand down a binding agreement both parties must follow. Given that this decision is legally binding a contractor will be forced and legally obligated to follow it as well. It is important to keep in mind, that you will not be able to appeal this decision made by an arbitrator in court. 

The use of Mediation and Arbitration should be considered seriously by business owners when settling a dispute. This is because it is a more affordable way to resolve a business dispute as opposed to going to court. 

Legal Solutions

Using lawyers to rectify a business dispute with a contractor should be seen as a last resort, as it usually marks a point of no return in your relationship with your contractor.

To Sum Up 

To summarise. Here are the key points that you should consider when handling a dispute with a contractor.

  • Firstly, set up a formal meeting and make clear the issues you have 
  • It is important to consider all your options including alternative dispute resolution methods such as mediation and arbitration
  • If your contractor is still being uncooperative make sure to seek legal advice

If you need any assistance in settling a dispute with a contractor or any dispute generally, our commercial lawyers are here to help. Just call us at 1300 337 997, or complete the form on this page. 

About Philip Evangelou

phillipPhil is a director at OpenLegal. He has over 16 years experience working in private practice and in-house counsel in Sydney and London, giving him expertise in employment law, IP, finance, leases, dispute resolution, insurance and contracts.

About Phillip Salakas

Phillip SalakasPhillip is completing his law degree at the University of Technology (Sydney). He worked previously with Lawpath, and Justice Action. His interests are with construction and technology law.