Mediation and Conflict Management - Case Study Example

Mediation and Conflict Management Name: Hamad Obaid Almazrouei Due Date: 1. NOV. 2012 Mediation and Conflict Management Introduction Conflicts in the construction industry are unavoidable. Causes of the conflicts can be related to inappropriate contracts and unpredictable incidents that could not be foreseen at the signing of the contract (Fenn, 1992, p. 256). Contracts are the basis of daily conflicts in the construction industry. Company reputations need to be preserved and also contractor-client relationships need to be maintained for the purpose of future business. For this reason, conflict resolution strategies like mediation serve better than court proceedings. The essay seeks to analyze the mediation of a conflict between two parties of a construction contract, Jacqueline and Lillian. Other parties are also involved in the process. Client Group, Background to the Dispute and Nature of the Conflict Jacqueline’s father has contributed to her house renovation expenses by selling his house and moving in with Jacqueline and her children. She is a single mother of two pre-school children who need their grandfather’s presence in the mornings when their mother is holding her classes. MACE construction is another party to the conflict since it has a contract with Jacqueline and is represented by its manager Lillian. The conflict is as a result of part performance of a contract between the MACE construction company, represented by Lillian, and Jacqueline, who is its client. Being a viable contract, it is enforceable by law by any of the parties that feels aggrieved. However, mediation can help both parties resolve the conflict by getting to understand each other, the causes of the conflict and what measures could avoid repeated mistakes. Mediation helps parties that need to preserve their relationships as it enables the resolution of conflicts while maintaining the relationship between parties (Lovenheim & Guerin, 2012). Determining the nature of the conflict and the issues surrounding it is the first step towards resolution of the conflict. From the feelings that parties express, it is easy to judge them, however, if this happens, the mediator will ignore the goal of arbitration. Focusing on the roles for both the parties and the extent of their performance will help the mediator to understand the situation and formulate the appropriate advice for the parties. The mediator however is supposed to employ mediatory qualities (Cooley, 2006, p.35). Mediators need to have full knowledge of the major issues surrounding the conflict in order to establish the strong and weak points of both parties so as to achieve the goals of mediation. Theoretical Rationale of the Conflict Management Strategy Chosen The framework for mediation style depends upon the type of conflict in question as well as the mediator’s approach. Boulle (2005) provides guidelines covering principles and processes of mediation and where they are applicable. Using the collaborative approach and the compromising approach (Boulle, 2005) both the contracting company and the client agree to the resolution based on their interests and individual needs. The mediation applies Evaluative mediation principles through the process of conflict resolution, and takes into consideration the interests of the parties and legal principles. The causes of the problem concern managerial duties that will be resolved by a greater understanding of each party’s obligations and legal rights and duties. The issues surrounding the problem are legal and professional, involving financial claims and consideration from both parties. Evaluative mediation is the appropriate framework for resolving the conflict at hand. The conflict requires an understanding of legal obligations which affect professionalism and need awareness of the duties (Folger, 1994). Improving awareness of the parties concerning their different legal rights and obligations as bound by the contract will solve the problem of self righteousness, each thinking that they deserve what they want. According to Shapiro (2005, p. 3), contracts describe the key obligations of parties and also define claims that parties have against each other. These contracts can become sources of disputes in the construction sector. Evaluative mediation in this case will employ analysis. It will use the legal components surrounding a contract to determine the validity of the parties’ attributions in the discussion. The law of contract and elements of its formation help people understand the circumstances under which conflicts may arise after formation of a contract. The law also provides possible legal applications since contracts are formed everywhere and everyday (Bennett, 2012). Examples of day to day contracts include contracts by multi-national organizations or construction companies. Such organizations cannot avoid entering into contracts since that means obtaining clients for profitable returns, which is the sole purpose for their operation. The reason for the laws of contracts is to put clear distinctions between valid contracts and other forms of agreements, for instance, an agreement between couples that a husband gives the wife a percentage of his money per week. It is arguable that the husband is obligated to do so and therefore can be sued for default under the law of contract. Clarke (2012) clearly states a contract is not enforceable if there was no legal relation created. This makes it a void contract. Exactly what terms govern a given contract, and whether these are express or implied in nature, needs to be established. In a case where a seller convinces a client to purchase a machine manufactured 5 years ago, telling him that it has only passed into two hands, if it turns out that the seller’s statement was not true, then does the statement amount to breach of the contract or misrepresentation? Does this breach amount to consequences that are contractual and those that are not contractual, or are there no penalties? The terms need categorization in order to qualify for remedies in case there is a breach. A contract is surrounded by legal provisions that parties need to keep in mind and uphold through the process to termination unless otherwise stated. When parties of a contract fail to realize the power of a construction contract, their duties and their exposure to potential liabilities to the other party, rights is sometimes infringed, leading to a misunderstanding. As a result, a conflict arises. The mediator role comes in at this stage, maintaining neutral ground and acquiring information concerning the feelings of the parties. This can be through asking questions like: What do you think the contractor should have done or what do you think he is obligated to do? Making the other party understand their obligation makes it clear to them. One party’s reactions and declaration of their interests will not be mistaken by the other for selfishness. They understand that it the law that requires them to perform. They think of another party as selfish or self-centered when it is the law, not their character, which is relevant to the conflict. When there is failure to appreciate the power of a contract, conflict can arise. In most cases, causes of conflicts arise from drafting and use of construction contracts, failure to realize the power that contracts carry and the standard form of contracts. This leads to maltreatment of the contract and conflicting disparity between parties, costing them financially and wasting their time, like the case in his essay. There can be other causes that will result from the conflict and failure to honor the power of contracts, such as poor communication between parties. For example, in the conflict between Lilian and Jacqueline, concerns are put forward concerning a delay in performance on a house being constructed by a contractor company, which has a manager as its representative. Jacqueline is distressed because delays are causing tension in her home, with her father having contributed to the expenses too; he is also demanding an explanation for the delay. This is also not only costing her financially, but also students who are having classes in the lounge room cause disruptions to family activities. Jacqueline may think that Lilian is ignorant about the company’s obligations under the contract. She might not be aware of her obligations too in such a situation, but her interests have become a priority. On the other hand, Lilian might think that Jacqueline is unreasonable; instead of paying the installment to settle the issue, she is visiting the office to ‘make a scene’. Lilian might also be unaware or assuming her obligations in the contract and as per the situation. To some extent, this is part of the hypothesis of the mediation. Ignorance or lack of knowledge of the obligations might not be a problem, but failure to appreciate the owner of the contract, in this case Jacqueline and the obligations binding it is problematic. Feelings of anger, after having paid funds for initial installments and the failure to complete the construction work, might be devastating. Having to cope with uncompleted work, with other high margin contracts at hand and maintaining the company’s reputation might also be depressing. In seeking to have her interests met and her house completed, Jacqueline needs to understand possible disparities in a contract as well as her obligations and rights. Lilian also needs to understand any future exposure to risk as a result of the contracts that her firm enters, and her obligations in such situations and any other situation as the representative of the company. Current situation Lilian’s position Lilian is a manager of a construction company which has a lot of work in its schedule. She has organized her work considering the company’s interests, and a working schedule which she is comfortable with. Lilian’s interests Lilian’s company still has a lot of work and a contract coming up that she cannot ignore, based on her company’s interests. Jacqueline’s position Jacqueline is a mother, a daughter and a teacher, who for convenience purposes wants her house complete and her daily activities resumed. Jacqueline’s interests She would be at peace if her house is completely renovated. Expectations Lilian prefers getting another contractor to work on the job. Jacqueline wants her house completed as fast as possible. How to meet the expectations Through evaluative mediation The following is a summary of the conflict later discussed. An overall summary with a referenced personal analysis and discussion of the mediation skill and processes used and your current practice orientation Evaluative mediation differs from other helping professions such as therapeutic and facilitative mediation which focus on relationships. Stulberg (1997, p. 995) states that evaluative mediation focuses on rules and laws and requires expertise in the area of conflict. In this mediation, focus on the legal contractual provisions of the contract between Lilian and Jacqueline derives more strength to facilitate the mediation. Professionalism and assessment are also a requisite for this type of mediation. This may compromise neutrality to some extent. Parties’ relationship in this case is not a major consideration since provisions in the law of contract that guide the mediation might not favor one party, which might ruin the relationship. The mediator is the controller of the outcome basing on his/her area of expertise and should consider the qualities of his/her profession (Wade, 1999). Failure to consider the other party’s interests and contractual rights can lead to a conflict. Jacqueline may feel that her interests and rights have been infringed by MACE Construction Company and its representative Lilian because of the refusal to continue with construction at her home. According to Clarke (2005), rights and obligations of parties in a contract are defined by the terms of the contract, which binds the parties. In the transcript, there are rights being infringed and obligations being ignored (Appendix 1). Infringement of rights is seen because Jacqueline’s right to have a completely renovated house by the stated date is compromised by MACE Company. An attempt to seek explanation from the manager leads to a bad argument. However, on Lilian’s side, the conflict is all about her being compensated for the work she has done to the extent of her performance, which she thinks Jacqueline is overlooking. Here, getting to understand the subject matter and basis of the conflict is important. Misunderstanding of implied and expressed rights and obligations in contracts often results in awkward situations between owners and contractors. Failure of the contractor regarding construction terms, elements that are within budgetary limits and intended functions by the owner result in a dispute in their professional relations (Shapiro, 2005, p. 5-6). In the conflict between Lilian and Jacqueline, making Lilian understand the company’s full obligation, performance of the obligation and penalties for a casual termination of the contract may boost her awareness and increase her appreciation of the power of a binding contract. It is the role of the mediator to assess failure of performance on the part of both parties, and their strengths, while applying professionalism and legal fact to the incidences. From Jacqueline’s statement that the delay is causing tension in her family: what are these tensions and are they directly related to the act of delay of the construction work? Are there proofs of this? The mediator here tries to link these damages with the act of failure to perform. They must be a direct result of the harm caused by the breaching party, and an act of delay as per the law of contract. Intervention is Evaluative and the outcome is likely to lose neutrality, as the opinions that the mediator expresses are likely to favor one party over the other. This might be Lilian or Jacqueline. Having had a tight schedule for the construction work, Lilian is having a hard time as the manager of the company, adjusting to rectify the construction that has been damaged by the rains. With other projects at hand which are more profitable and maintaining the company’s reputation, she is torn and needs to make a decision for the company, which she has but does not know how to break it to the owner, Jacqueline (Appendix 1). Disregard of the power of a contract might be as a result of Lillian’s position to protect the company’s reputation and ensuring the safety of the company’s accounts through claims. Managerial pressure contributes to conflicts that mangers have with clients and within their working area. At this level, the mediator should point out the company’s obligations towards its clients and how significant it is to the general performance of the company. The power of a contract binds parties to their obligations until termination (Veistch, 2011). The mediation aims at structuring appropriate managerial advisory services for the current and future activities of the same nature. This is achieved through the legal knowledge and professionalism it applies. Lilian has the need to understand how to handle the company’s clients to future contracts too, as the law provides for binding contracts. These are the facts that Lilian overlooks. The mediation largely depends on the intervening contribution of the mediator to help resolve the issue, both for the immediate, current and future issues. Legal provisions are finally stated and the parties informed of their duties in case of a future contract. The parties cannot win since judgment will lie on one side among the parties but the mediator should ensure that the advice is appropriate and relates to the management, in accordance with the given industry and its norms. Lilian fails to consider the provisions for termination of a contract and the requirement for communicating to the other party. Termination of the contract needs knowledge by both parties and not just one. Identification of areas of personal strengths and weaknesses Strengths I felt I displayed strengths in my ability to use legal provisions of the subject matter and facts on rights and obligations. I also used my expertise in effecting the outcome within the range of likely court judgment. Weakness I avoided in depth teaching of the skills and requisites for future references. Below is the analysis of the audio-recording: Analysis of audio-recorded mediation role play The parties are both interested in their expectations. Lilian in the managerial position of the construction company focuses on protecting the image of her company and its interests while Jacqueline is interested in the completion of her house renovation. Lilian is attached to the relationship her company has with Jacqueline’s architect and that is why she says that they were busy but took up the job, something they did not do as a company for the 10 years she has been working with them. The conflict arises from the client’s visit to the manager, who thinks that Jacqueline should have waited for information from the company. By starting the construction, it means that the contract is sealed and binding to both parties, and that Lilian’s company got into the contract at its own free will. By payment of the first installment to MACE Company, Jacqueline performs a part of her promise. There seems to be a breach on the part of the company when it performs only part of its promise. Jacqueline is aggrieved and demands that her right to house renovation by the company be effected. She insists that Lilian’s company had a promise to fulfill and that is exactly what she wants. According to Misronet (2011), failure to perform a promise amounts to a breach of the valid contract, after which the law calls for remedies and compensation to the non-breaching party. Jacqueline could just have agreed to pay for the repair of drainage and the extra expenses for floor materials and sound proofing but she did not since it is not part of the contract. Lilian did not cause the rains anyway; they are a natural cause. This means that she is not liable for the destruction caused by the rain. It is the role of the mediator to assess failure of performance on the part of both parties, and their strengths while applying professionalism and legal fact to the incidences. From Jacqueline’s statement that the delay is causing tension in her family: what are these tensions and are they directly related to the act of delay of the construction work? Are there proofs of this? The harm that Jacqueline is suffering is a direct effect of the delay since her father needs her to explain the delay, and he cannot move back to his house since it has already been sold and the money used to contribute to the renovation costs. There are financial losses incurred on her part for the additional costs and her not performing as part of her job that earns her income. Distraction of her students by her family’s activities may cost her a big deal if students withdraw. This is Jacqueline’s position that is making it difficult for her to remit more funds before completion of the work, a risk she dares not take since the financial loss is really threatening, having suspended her performing part time job. Jacqueline is right to demand explanation and settlement of the deal on the part of Lilian’s company to complete the construction and save her the losses. The owner should not be suffering losses as a result of a contractor’s fault, which losses would otherwise be avoided if there was full performance. Based on the rights and legal provisions, the mediator is likely to leave out some interests and may not favor all expectations of the parties. Lilian majorly contributes to the situation. She might genuinely be unaware that she is infringing the owner’s rights by withdrawing from the contract when she has only performed a part of it. However, she intended to commit herself to the project in order to keep the relationship with Jacqueline’s architect. Therefore, there must be a reason for her reacting in the manner she does towards Jacqueline when she visits the office, which reveals the existence of that a problem. Jacqueline is right to visit the MACE company manager’s office for an explanation of the delay in the renovation of her house. Her house is the old fashioned type, and with her father moving in, it means that it is congested. The father also deserves an explanation. From the information and the arguments of the parties, Lilian depicts negligence and ignorance when she fails to recognize the damages accrued to Jacqueline as a result of delays. According to Clarke, (2008), ignorance is no defense in the court of law for the delayed performance of her obligations, and negligence is offence. Jacqueline does not understand the provisions on natural causes which at times affect contracts. Damage as a result of natural causes are to be shared by the parties unless otherwise stated in the contract, and not just one party as none of them is liable. The contract contains a stated date for completion of the construction work. Although natural causes may have contributed to the delay, Jacqueline finds out that MACE Company has been working on other people’s sites after the rains subside, explaining their failure to return to her house for the construction work. Lilian confirms Jacqueline’s findings herself by stating that the insurance company work had a grater margin. This amounts to breach of contract, which demands compensation and remedy in the court of law for the aggrieved party, Jacqueline. The parties are indifferent to the settlement that I have proposed based on legal provisions and considering both parties. No one is ready to spend any amount as a result of the settlement that I propose. Considering the possibilities of court’s ruling to the case, Lilian and Jacqueline agree to perform the proposed settlement. Conclusion A Mediation exercise serves better than court proceedings which consume a lot of time and work and also involve more expense. Evaluative mediation serves well for the conflict between Lilian and Jacqueline since it involves parties in a contract and disputes of rights and obligations bound by the contract. Determining the basis of a conflict and assessment of positions of the different parties serves well as an intervention process. Having a recorded audio-play during the meeting helps in the process of analysis. References Bennett, M. (2012). Repudiation and Terminating a Contract. Seven Wentworth Chambers http://www.legalwiseseminars.com. Boulle, L. (2005). Mediation: principles, process, practice: Mediation as a comparative dispute resolution process. Sydney: LexisNexis.Butterworths. Bush, R. A. B., & Folger, J. P. (1994). The promise of mediation: Responding to conflict through empowerment and recognition. San Francisco, CA: Jossey-Bass. Clarke, P. & Clarke, J. (2012). Contract Law: Commentaries, Cases and Perspectives. OUP Australia & New Zealand. Clarke, P., Clarke, J. & Zhou, M. (2008). Contract Law: Commentaries, Cases and Perspectives, Oxford University Press, South Melbourne, Vic.  Fenn, P. (1992). Construction Conflict Management and Resolution. Taylor & Francis publications. Lovenheim, P. & Guerin, L. (Nolo). Mediate, Don't Litigate: Strategies for Successful Mediation. http://www.nolo.com/products/agreement-to-mediate-pr346.html Micronet.com (2011). Contract Validity, Breach of Contract and Termination. http://www.misronet.com/construction_contract.htm Shapiro, B (2005). Inherent conflicts in the construction industry and the structure of contracts. http://www.shk.ca/docs/SHK_InherentConflictsConstructionIndustryStructure_of_Contracts.pdf Veitch, K. (2011). Social Solidarity and the Power of Contract. Journal of Law and Society, Vol. 38, Issue 2. Wade, J. (1999).What skills and attributes do experienced mediators possess? ADR Bulletin: Vol. 2: No. 5, Article 3. Available at: http://epublications.bond.edu.au/adr/vol2/iss5/3 Read More