Contracts end conflicts but also can start them

Fall has arrived in the Coastal Bend, a time of change, not just the cooler weather. New projects seem to be gaining momentum, including a Westside outdoor mall that involves a tax incentive plan with the city and an outlet mall that involves a land deal with the county. Each transaction will require several agreements and contracts.

Contracts are a way of resolving disputes in advance. But sometimes contracts start, rather than end, disagreements. I had to deal with one of those recently, centering on the disputed interpretation of contractual language. The project was a medical office complex and the disagreement was between the developer and a physicians group that commissioned the project. The issue was whether the contracts obligated the developer to obtain pre-construction environmental inspections of the property and whether the failure to do so was a breach of contract allowing one or more of the parties to void the contracts.

The developer asserted that the physician group waived the requirement. At stake were highly lucrative fees that most of the parties stood to gain financially if the contracts were enforced.

After much discussion, it became apparent that one or more of the parties appeared to be using the lawsuit to renegotiate the monetary terms of the contract. Also of concern to all were the anticipated litigation costs that each party agreed could be substantial.

After discussing the legal issues and acknowledging the ambiguities in the contracts, each of the parties agreed that they would be better off modifying some of the terms and enforcing the contracts than to engage in a lawsuit with no end in immediate sight and spend considerable sums on attorney fees and expenses. The parties reached a settlement and everyone left feeling that the best result under the circumstances was achieved.

Perhaps, with the next season change, these mall developers and local governments will have emerged with solid agreements that lead to construction, and perhaps with the completion of those projects, all parties will inspect the results and agree that they agreed.

Andrew Lehrman is a certified mediator and a partner in the law firm of Anderson Lehrman Barre Maraist LLP. He has been the Better Business Bureau's general counsel since 1980.

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