The easiest way to avoid a dispute is to give in, or run away, every time one occurs. Occasionally this may be appropriate, but as a general business strategy it is unlikely to prove very helpful in the longer term. Thus something more positive is needed.
I find that the best way to avoid commercial disputes is to record your commercial agreements in writing, in clear terms, before work starts. I find it is essential to define the limits of the work to be undertaken, and the quality to be achieved, together with the price to be paid for each separate item. A time for performance also needs to be clearly defined, and the consequences of late completion need to be spelt out. This is all pretty obvious stuff. However, with constructions contracts a few further precautions need to be considered.
If the paying party is permitted to vary the design and the work scope as the work progresses, which in construction contracts is usually the case, or the site or other conditions under which the work is carried out is not as originally envisaged by both parties, a mechanism for valuing variations of work scope and/or site conditions needs also to be clearly defined. Also, depending on how long the works are expected to take to complete, thought needs to be given to the frequency of interim payments, if any, as work progresses, and the procedure by which interim payments are claimed and quantified, the date by which interim payments are required to be paid and the consequences of late payment, or previous over payment.
Finally, thought needs to be given to how disputes are to be resolved in the event of a dispute arising. Please see my Dispute Resolution page for a brief review of the major methods of dispute resolution available.
Readers in UK ought to be aware that UK legislation imposes statutory requirements in respect of UK construction contracts, principally concerning payment and dispute resolution provisions. These provisions do not generally apply to work commissioned by homeowners within their own homes, but may do if a standard form of construction contract is used to define the parties' respective rights and obligations. Please be aware that an often unexpected consequence of the current legislation is that if a paying party does not promptly state an alternative sum in respect of a working party's payment application with which he disagrees, the paying party is likely to become liable to pay the working party the unchallenged sum for which the working party has applied, notwithstanding that the paying party disagrees with it. The relevant provision of the legislation appear within sections 110 and 111 of the Housing Grants, Construction and Regeneration Act 1996, as amended by the Local Democracy, Economic Development and Construction Act 2009.
Finally, I would strongly advise anyone presented with bespoke conditions of contract by the other party to read them carefully before accepting them. Un-amended standard form construction contracts usually distribute risk fairly between the parties. However amendments to standard form construction contracts rarely do, and need to be carefully read through and understood before being accepted. If gaining a proper understanding of a complicated contract provision means getting professional advice, then that is usually money well spent in order to gain a proper understanding of the risk being transferred, and not accepting the risk if it is found to be too onerous. Not to follow this simple precaution might cost many times more than the professional advice would have done.