Conflicts and Disputes in Commercial and Contracting Relationships

Most organizations aspire to build collaborative relationships with customers and suppliers, and many believe that their efforts are effective. This report challenges that perception by revealing the frequency of ongoing conflicts and the extent to which they are allowed to damage performance.

Communication breakdowns and misaligned objectives often lie at the heart of these tensions and, with the volatility of today’s market conditions, the potential for conflict is increasing. It is important to understand why these issues arise and to explore the underlying factors that shape perceptions and behaviours on both sides. However, the real purpose of this report is to set out ways that evolving contracting processes, from initial agreement to post-signature interactions, can be optimized to drive more effective, long-term partnerships.

Our research confirms that the volume and severity of disputes varies by industry and, to a degree, by culture. The question of culture is also significant in the way that disagreements are resolved – for example, disputes that occur in the United States are far more likely to lead to litigation than in any other geography; those in Japan are very unlikely to result in litigation.

It may seem obvious that conflicts and disputes represent a core indicator of relationship health, yet our research confirms that few organizations actively monitor their frequency, their underlying causes or ways that negative consequences can be diminished or avoided.

Ultimately, this report challenges businesses to rethink how they approach conflict. By moving away from transactional thinking and toward a more relationship-driven approach, companies will create stronger, more resilient partnerships that deliver better results. The insights provided in this report not only capture the current state of the industry, but also offer valuable data to anticipate future trends so that businesses can adapt for sustained success.

Embed conflict metrics

As with any quality improvement, you need data and this should come from contract governance frameworks — track the frequency, root causes, and resolution timelines of claims and disputes as key indicators of relationship health and consolidate data to support root cause analysis.

Invest in post-award capability

Are you one of the many organizations where resources are focused heavily on winning and awarding contracts, rather than managing them? Evaluate whether you have sufficient resources, skills, and tools in place to proactively manage contract performance, change, and issue resolution.

Shift incentives and behavior

If collaboration is important, consider how to reward teams for collaborative behaviors and long-term value creation, not just short-term cost savings or contract award.

Redesign contracts for flexibility

Institute work to eliminate rigid, control-based contracts and develop frameworks that anticipate change, promote accountability and support users.

Reduce over-reliance on external advisors

Where possible, develop internal commercial acumen to reduce dependency on third-party interventions that may delay resolution and strain relationships. Where third parties are involved, be clear in the behavior you expect and do not allow your own personnel to abdicate responsibility for the outcome.

Clarify ambiguities early

Ideally, unclear terms or assumptions are addressed before contract signature, but often they emerge during handover or implementation, or only become evident when unexpected events occur. Bring these issues to the surface rather than allowing misunderstandings or conflict.

Document decisions and deviations

Keep a clear, auditable trail of key discussions, changes, and performance concerns to support constructive resolution if issues arise. Where possible, create a shared record to avoid disagreements over what was discussed or agreed.

Surface issues promptly

Don’t delay acknowledging concerns or problems early through agreed channels, before they turn into disputes. Work with others to propose solutions rather than just highlighting problems.

Engage in open dialogue

Build trust by creating the environment for honest conversation with internal stakeholders and counterparties, especially around cost drivers, risks, and future plans.

Learn and apply

As you move through every project or contract cycle, review what caused tension or success and adjust your practices based on what you learn.

The findings underscore a noticeable gap between the perceived effectiveness of traditional conflict resolution models and the reality of their impact, particularly in terms of slowing resolution processes and potentially damaging long-term relationships. As both buyers and suppliers increasingly recognize the importance of collaboration, the need to move away from adversarial methods toward more cooperative, negotiation-based approaches is clear. Traditional methods—such as those involving law firms, advisories, or consultancies—are increasingly seen as inefficient, often delaying resolution and, more importantly, undermining trust and collaboration. Over a third of respondents indicated that these methods hinder the speed of resolution, and more than half felt they negatively affect the strength of customer-supplier relationships. This highlights the need for businesses to move away from adversarial, formalized systems toward more agile, collaborative approaches that prioritize relationship-building.

The research further identifies the root causes of conflict—such as ambiguous or missing contract terms, misaligned expectations, and evolving business needs—that, if not addressed proactively, can cause long-term strain on partnerships. Despite the prevalence of disputes, most buyers and suppliers reported strong relationships, suggesting that, when managed effectively, conflicts need not lead to lasting damage. This insight presents a valuable opportunity for businesses to not only resolve disputes but also build frameworks to prevent them in the first place, ensuring smoother, more productive interactions.

Tim Cummins

President

WorldCC

Fayola-Maria Jack

Chief Executive Officer

Resolutiion

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World Commerce & Contracting

Conflicts and disputes in commercial and contracting relationships

Executive summary

Conflicts and disputes in commercial and contracting relationships

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