• 14
  • September
    2011

A contract dispute between the U.S. government and a firefighting air tanker company has grounded almost one-half of the U.S. tanker force. Meanwhile, heat-stricken Texas continues to burn under one of the worst brush fires in Texas history, a fire that damaged at least 1,550 houses.

The U.S. Forest Service cancelled its contract with Aero Union after an undisclosed contract dispute involving Aero Union's 15-year maintenance plan. According to the director of the Forest Service's fire and aviation management program, there was a safety issue involved with the contract. "We can't in good conscience maintain an aviation contract where we feel lives may be put at risk due to inadequate safety practices," he said.

Now, due to the contract dispute, the U.S. Forest Service has only 11 tankers, compared with 40 tankers nearly 10 years ago.

The Impact of Contract Disputes on Businesses

Aero Union had contracted with the Forest Service for 50 years. According to Aero Union's CEO, 60 employees - who were vital in the operation of the seven P-3 Orions under contract - are now out of work.

Companies like Aero Union rely on contracts to stay in business. A contract dispute can be a small issue - such as a dispute involving the sale and delivery of nonessential goods - or it can mean life or death for the business.

Most likely, your business already understands the impact of contract disputes. At the very least, disputes about contract interpretation can harm business relationships. Disputes that are not quickly resolved lead to expensive business litigation. And losing a contract dispute can cripple a business.

A well-written contract can both reduce the likelihood of misunderstandings that create disputes and minimize the chance of losing if a dispute becomes unavoidable. Among the step you can take to protect your rights before a contract dispute arises are:

  • Ensuring that the contract is legally accurate and includes consideration and all essential terms of the agreement
  • Ensuring that the contract includes appropriate remedies should a material breach of contract arise
  • Detailing what should be done if performance of the contract is not complete, late or excused, including what conditions must be met for the contract to be performed
  • Assessing appropriate risk before signing the contract
  • Hiring an experienced contract dispute attorney to draft or review your contracts

Source: Business Insider, "The Federal Government Grounded Half Its Firefighting Planes Just Weeks Before the Texas Wildfires," Robert Johnson, Sept. 7, 2011.