Preventing Contract Disputes: Common Causes in Missouri Business

The patterns that show up in every industry — and the habits that break them

Most contract disputes don't come out of nowhere. A contractor and a government agency fight for four years over sandblasting standards that a clearer specification could have prevented. A software consultant loses the better part of a million dollars because one phrase in his payment schedule was genuinely susceptible to two different meanings. A parent company guarantees its subsidiary's construction contract and then spends years in court arguing over whether it agreed to arbitrate — a question that turned on whether one sentence used the words "incorporated by reference." A trade association sues on behalf of its members and loses before the court even looks at the underlying issue, because the plaintiff wasn't the right party.

These aren't exotic legal problems. They're ordinary drafting and documentation failures, and they show up in every industry: plumbing codes and government construction, cement plants and software development, painting subcontracts and consulting agreements. The specific facts change; the root causes don't.

This article works through five recurring sources of contract litigation — drawn from real Missouri cases — with concrete guidance on the habits and practices that prevent each one.

Ambiguous specifications: when two people read the same sentence and reach different conclusions
Payment caps and aggregate calculations: when "until $X has been paid" means two completely different things
Arbitration clauses: broad, narrow, and accidentally self-defeating
Guaranties and incorporated documents: when "reference to" isn't the same as "incorporating"
Standing to sue: making sure the right party brings the right claim

Illustration: The patterns that show up in every industry — and the habits that break them

1. Ambiguous Specifications: When Two People Read the Same Sentence and Reach Different Conclusions

Busch & Latta Painting Corp. v. State Highway Commission, 597 S.W.2d 189 (Mo. App. 1980), is one of the most detailed case studies in how a single specification can produce an entirely genuine dispute between professionals who both read the same document and came away with completely different understandings of what was required.

Busch & Latta won the bid to paint the Hannibal Bridge crossing the Mississippi River. The contract's surface preparation specification required sandblasting to meet the requirements of "Steel Structures Painting Council SSPC-SP-6-63 Commercial Blast Cleaning," but added that "all old paint must be removed" and that the surface had to equal "at least" a pictorial Swedish Standard called "C SA 2 of SIS 05 59 00-1967."

The technical collision: "Commercial Blast Cleaning," as defined in the Painting Council's own published specifications, explicitly allowed light staining and tight paint residues to remain on up to one-third of the surface area. The Swedish pictorial standard C SA 2, by contrast, depicted bare, unpainted steel — because it was developed for previously unpainted surfaces and had no category for previously painted steel at all. When inspectors required what the pictorial standard showed (no visible paint anywhere), they were effectively requiring a "near white" or "white metal" blast significantly more expensive than a "commercial blast" — roughly 5 times as much sand, 283 days of delay, and hundreds of thousands of dollars in cost overrun.

The Commission's inspector admitted there was a conflict between the definition of a "commercial sandblast" and the "remove all paint" language. The Commission's own expert testified the contract was capable of "more than one interpretation." Even the Painting Council's specifications noted that the C SA 2 pictorial standard was a cross-reference for unpainted steel and that "as additional standards become available, particularly for initial surface conditions such as previously painted steel, these may be included by reference in the contract" — a sentence that tacitly acknowledged no appropriate pictorial standard for the Hannibal Bridge's situation was included.

Courts apply a layered set of principles when specifications are genuinely ambiguous. Whether a contract is ambiguous at all is a question of law for the judge — not a question the jury decides. If the judge finds ambiguity, the jury may then be asked to determine the parties' intent from the surrounding circumstances, trade usage, expert testimony, and the practical construction the parties themselves placed on the agreement in their conduct. "In construing ambiguous contracts the objective is to ascertain and render effective the mutual intent of the parties; and to achieve this objective the court will consider the entire contract, subsidiary agreements, the relationship of the parties, the subject matter of the contract, the facts and circumstances surrounding the execution of the contract, the practical construction the parties themselves have placed on the contract by their acts and deeds, and other external circumstances which cast light on the intent of the parties." Only when extrinsic evidence fails to resolve the ambiguity does the tie-breaker rule kick in — and when it does, ambiguity is construed against the party who drafted the contract. The Highway Commission, having drafted the specifications, bore the risk of the ambiguity it created.

The case resulted in a reversal and new trial, not a verdict, because the trial court's instructions were themselves contradictory — simultaneously telling the jury to resolve the dispute and telling it to rule against the drafter. The outcome, years later, remained uncertain. That's the cost of a specification that conflicted with the technical documents it referenced.

Prevention: Four Drafting Habits for Technical Specifications

Define what you mean, not just what you're pointing to. When a specification incorporates an external standard by reference, check whether that standard was written for the situation you're describing. The C SA 2 pictorial standard was not designed for previously painted steel — using it as the visual benchmark for a repainting project created a built-in conflict with the verbal standard. If external documents define terms differently than you intend, say so explicitly in the contract itself.

When two standards govern the same thing, reconcile them explicitly. The Busch & Latta specification had both a verbal standard (commercial blast, with its exception for residues) and a visual standard (C SA 2, showing no paint). Rather than assuming they were equivalent — which technical evidence showed they were not — the specification should have said which one controlled when they diverged, or should have used a visual standard actually designed for previously painted surfaces.

Test ambiguous language before signing. Have someone with no context read the critical specification and describe what they'd do to comply with it. If a competent contractor could reasonably interpret a requirement differently than intended, the requirement needs revision — not clarification at a job-site meeting three months later.

Incorporate external documents with a copy attached. The Busch & Latta specification referenced Painting Council and Swedish Standards that were not physically part of the bid package. When technical standards are external to the contract and can be updated, reprinted, or interpreted differently over time, attaching the operative version as an exhibit reduces the chance that a newer or differently worded version becomes the measuring stick.

2. Payment Caps and Aggregate Calculations: When "Until $X Has Been Paid" Means Two Completely Different Things

Zeiser v. Tajkarimi, 184 S.W.3d 128 (Mo. App. 2006), is a contract dispute over a single phrase in a consulting agreement — and roughly $677,000.

When Donald Zeiser sold his shares in Three Rivers Systems, Inc. back to the company, the parties simultaneously signed a consulting agreement under which Zeiser would continue to work for Three Rivers as a consultant. Section 3 of that agreement had several payment subparagraphs: (a) an annual salary, (b) and (c) quarterly payments equal to 20% of Three Rivers' net income, and (d) additional quarterly payments equal to 30% of net income — this one to continue "until an aggregate sum of $1,400,000 has been paid to DKZ [Zeiser]."

Three Rivers and Tajkarimi argued that "aggregate sum" meant the total of all payments across all subparagraphs — salary, 20%-of-income payments, and 30%-of-income payments combined. Since those totals had exceeded $1.4 million, they said the obligation was satisfied.

Zeiser argued that "aggregate sum" meant only the total of the 30%-of-income payments under subparagraph (d) specifically — that he was entitled to $1.4 million in addition to his salary and the 20% quarterly payments, which were separate and distinct categories of compensation. Under this reading, only $735,485 of the $1.4 million had been paid under subparagraph (d), leaving about $677,000 outstanding.

The trial court sided with Three Rivers on summary judgment, finding the phrase unambiguous. The court of appeals reversed. The phrase "until an aggregate sum of $1,400,000 has been paid" was susceptible of more than one reasonable meaning — it did not specify which payments counted toward that aggregate — and reading the entire contract structure added to, rather than resolved, the uncertainty. Critically, if subparagraph (d) was meant to be separate from the others, subparagraph (e) provided for a new set of payments to begin only after "both the Stock Redemption Price and $1,400,000" were paid in full. Why would subparagraph (e) separately reference the $1.4 million as a threshold if the salary and 20% payments already counted toward it? That structural argument supported Zeiser's reading. But it didn't definitively resolve the dispute — it illustrated the ambiguity. The case went back to the jury.

The court laid down the applicable framework clearly: "a contract is ambiguous only if its terms are susceptible of more than one meaning so that reasonable persons may fairly and honestly differ in their construction of the terms" — but importantly, ambiguity can arise not just from inherently unclear language, but from "language which appears plain considered alone" yet "conflicts with other language in the contract, or if giving effect to it would render other parts of the contract a nullity." A payment cap that looks obvious in isolation can become genuinely uncertain when read against the payment structure around it.

Prevention: Writing Payment Caps That Can Only Mean One Thing

Name the bucket, not just the total. If a payment obligation is designed to be satisfied by payments from one specific type of payment — "additional 30% payments under Section 3(d)" — say that. "Until $1,400,000 has been paid under Section 3(d)" removes all ambiguity about which payments count. The generic phrase "until $1,400,000 has been paid" invites a fight about paid from where.

Use a running ledger concept. For contracts with multiple payment streams feeding toward a cap, consider building in a tracking mechanism: "The total paid under Section 3(d) shall be tracked separately, and the obligation to make payments under Section 3(d) shall terminate when the running total of Section 3(d) payments reaches $1,400,000, exclusive of amounts paid under Sections 3(a), (b), (c), and (e)." That sentence would have avoided this case entirely.

Check the whole payment structure for internal consistency. The Zeiser dispute was made worse by subparagraph (e), which separately referenced the $1.4 million as a threshold, suggesting it was its own distinct milestone. Before signing a payment-heavy consulting or commission agreement, read all the payment provisions together and ask: does the sequence make sense under both possible interpretations? If one interpretation makes a later provision redundant or odd, that's a signal of ambiguity — even if each individual clause reads clearly in isolation.

State the "exclusive of" language affirmatively. If the intent is that certain payment streams don't count toward the aggregate, say so: "Payments under Sections 3(a), (b), (c), and (e) shall not be credited toward the $1,400,000 obligation under Section 3(d)." What seems obvious to the drafter often isn't obvious to anyone else — and years later, possibly not to a court.

If your business has revenue-sharing, earn-out, consulting, or commission agreements with rolling payment caps or aggregate thresholds, those provisions deserve careful review before they get tested. Our attorneys help clients build these structures so the numbers work the way they intended — not just the way they assumed. Reach out before the next agreement is signed.

Illustration: 2. Payment Caps and Aggregate Calculations: When "Until $X Has Been Paid" Means Two Completely Different Things

3. Arbitration Clauses: Broad, Narrow, and Accidentally Self-Defeating

Two cases in this batch deal with arbitration — one where the clause worked exactly as intended, and one where a change order nearly dismantled it.

Dunn Industrial Group, Inc. v. City of Sugar Creek, 112 S.W.3d 421 (Mo. 2003), arose from the construction of a new cement plant outside Kansas City. Lafarge Corporation hired Dunn Industrial Group (DIG) to design and build the plant under a contract containing a broad arbitration clause: "Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be settled by arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association."

Three Problems in One Case

The change order that might have swallowed the arbitration clause. A year into the project, the parties executed an October 2000 change order addressing outstanding cost and scope issues. That change order incorporated all terms of the original contract, but added a new sentence: "either party, at any time, may resort to their respective contract remedies or remedies as provided by law."

DIG's position was that "remedies as provided by law" meant either party could choose to litigate instead of arbitrate. If that were true, the mandatory arbitration clause would be essentially optional — either side could opt out whenever it decided court would be better. The Missouri Supreme Court rejected the argument. First, to rescind or modify an arbitration provision, the evidence must be "clear, positive, unequivocal, and decisive." Second, reading the two clauses together, "contract remedies" naturally means arbitration (the contract's designated remedy), while "remedies as provided by law" preserves other rights — like confirming an arbitration award in court or enforcing a mechanic's lien — that aren't inconsistent with the arbitration obligation. Reading the "law" clause to optionalize arbitration would effectively nullify the mandatory clause. And a "construction that would render a provision meaningless should be avoided." Doubts about arbitrability, the court said, are resolved in favor of coverage.

The structural principle here extends to any contract amendment, side agreement, or change order: if an amendment adds a "remedies as provided by law" or "either party may pursue all available remedies" clause, and there's an existing arbitration agreement, those two clauses need to be reconciled before signing, not litigated later. Either say the amendment preserves the arbitration clause or say it doesn't — don't leave a sentence that's reasonably susceptible to both readings.

The guaranty that didn't get the arbitration clause. DIG's parent company, Dunn Industries, signed a separate contract guaranty promising that if DIG failed to perform, Dunn would either complete the work or pay Lafarge's damages. The guaranty referenced the construction contract and was executed at the same time. But did the guaranty incorporate the arbitration clause?

The court drew a sharp distinction. In Missouri, matters incorporated into a contract by reference are "as much a part of the contract as if they had been set out in the contract in haec verba." Cases involving subcontractors had enforced arbitration clauses against parties who'd never signed the main contract — because their subcontracts specifically stated that the general conditions of the prime contract (which contained the arbitration clause) were incorporated by reference. But here, Dunn's guaranty only referenced the construction contract. It said Dunn guaranteed DIG's performance "in accordance with all its terms and conditions," and the construction contract was attached. But that isn't the same as specifically incorporating the arbitration provision. "Mere reference to the construction contract in the guaranty is insufficient to establish that Dunn bound itself to the arbitration provision."

This distinction — between mentioning a contract and incorporating its terms — matters enormously for any business that uses guaranties, performance bonds, or side agreements attached to a main deal. If the main deal has an arbitration clause and you want it to apply to a guaranty or related agreement, the guaranty needs to say so explicitly: "This guaranty incorporates by reference all terms of the attached Construction Contract, including but not limited to the arbitration provision set forth in Article [X] of that contract."

Mechanic's liens and arbitration — they can coexist. DIG filed mechanic's lien claims against the property, and a separate equitable mechanic's lien action was filed by another party. Under Missouri's mechanic's lien statutes, once an equitable mechanic's lien action is brought, it becomes the exclusive method of litigating lien claims against the property. DIG argued this meant arbitration was off the table. The court disagreed: "arbitration is a proceeding separate from litigation based upon its underlying purpose of encouraging dispute resolution without resort to the courts." The arbitration agreement could be enforced alongside the mechanic's lien process — they aren't substitutes for each other.

Prevention: Three Arbitration Drafting Rules

Draft the clause broad enough to cover everything you actually want to arbitrate. Language like "any controversy or claim arising out of or relating to this contract, or the breach thereof" is the standard template for a reason — it's been tested repeatedly and consistently covers the full range of disputes that arise from a contractual relationship. Narrow exclusions are the danger zone; as the Busch & Latta painting case demonstrated in a different context, a clause that excludes "disputes governed by the contract documents" can be read to exclude nearly everything, making the clause nearly meaningless.

If you amend the contract, check the arbitration clause. Any amendment, change order, extension, or side letter that adds language about "remedies" or "rights" should explicitly state whether it modifies or preserves the existing arbitration obligation. The safest language is the most direct: "Nothing in this Amendment shall be construed to modify, limit, or rescind the parties' agreement to arbitrate under Article [X] of the original contract."

If you want a guaranty to include arbitration, say so with precision. Reference alone isn't enough. The guaranty needs to say something like: "The Guarantor agrees that all disputes between Obligee and Guarantor arising under this Guaranty shall be resolved by arbitration in accordance with the arbitration provision in Article [X] of the Construction Contract, which provision is hereby incorporated by reference." Attaching the main contract to the guaranty, without those specific words, leaves the guaranty outside the arbitration framework.

4. Guaranties and Incorporated Documents: "Reference To" Isn't the Same as "Incorporating"

The Dunn case gives a perfect example of this distinction in the arbitration context, but the problem extends to any situation where one contract is meant to carry obligations from another.

The Missouri Supreme Court's framework for guaranties is worth understanding in detail. A guaranty is "a collateral agreement for another's undertaking and is an independent contract that imposes responsibilities different from those imposed in the agreement to which it is collateral." Guarantors' liability is "strictly construed according to the terms of the guaranty agreement and may not be extended by implication beyond the strict letter of the obligation" — but that strict construction "does not entitle a guarantor to demand an unfair and strained interpretation of the words used in order that it may be released from the obligation that it has assumed."

The court also worked through a subtle issue about who can enforce a guaranty when the named beneficiary isn't quite the party actually involved. Dunn's guaranty named "Lafarge Canada, Inc." — a wholly controlled subsidiary — as the obligee, not Lafarge Corporation itself, which was the actual party to the construction contract. A guaranty addressed to a specific party is generally a "special guaranty" enforceable only by that specific party. But there's an exception: where both parties to the guaranty intended the guarantee to benefit the principal, not just the named agent, courts will give effect to that intent. Here, every other document — the construction contract, the notation on each page, the guaranty's own description of the project — pointed to Lafarge Corporation as the entity whose performance was being guaranteed. The subsidiary was acting on Lafarge's behalf. Lafarge could enforce the guaranty.

This kind of inconsistency — a guaranty naming a subsidiary or affiliate rather than the actual contracting parent — is a common drafting problem that usually surfaces only when enforcement is needed. By then, it's too late to fix it without litigation.

Prevention: Guaranty and Incorporation Precision

Name the actual party. If the parent company is the real beneficiary of the guaranty, name the parent. If the subsidiary is acting as an agent, say so in the guaranty and confirm the principal's right to enforce. Don't let the organizational chart create ambiguity about who can call on the guaranty.

Use the "incorporated by reference" language precisely. "This guaranty incorporates by reference" is a legal term of art with specific consequences: it pulls the incorporated terms into the guaranty as if they were written there. "Pursuant to the Construction Contract" or "in connection with the Construction Contract" or "guaranteeing performance of the attached Contract" does not have that effect. If the distinction matters — and for arbitration clauses, dispute resolution, choice of law, and limitation of liability provisions, it almost certainly does — be explicit.

Attach and identify the right version. When a guaranty guarantees performance of "the attached contract," make sure the attached contract is the final, executed version — not a draft. Change orders and amendments that came later should also be addressed: either the guaranty covers them (say so) or it doesn't (say that too).

Consider what survives modification. If the main contract is later amended, what happens to the guaranty? If the amendment changes the scope of work, the schedule, or the payment terms, does the guaranty still apply to the modified obligations? The Dunn case involved a significant change order, and the court had to interpret how the guaranty's coverage applied to it. A short provision in the guaranty — "This guaranty applies to the Construction Contract as it may be amended from time to time, provided that no amendment increasing the Guarantor's potential liability shall bind the Guarantor without its written consent" — addresses the problem in advance.

5. Standing to Sue: Making Sure the Right Party Brings the Right Claim

Contracting Plumbers Ass'n of St. Louis v. City of St. Louis, 249 S.W.2d 502 (Mo. App. 1952), is a case about plumbing permits and a trade association's attempt to use the courts to protect its members' market — but the lesson it teaches is entirely modern, and comes up constantly in disputes involving business associations, franchise systems, and multi-entity corporate structures.

The Contracting Plumbers Association was a nonprofit made up of 95 licensed master plumbers. Its argument was simple: under the 1945 plumbing code, installation of gas water heaters should require a licensed plumber — but the city's building commissioner had been letting unlicensed people do that work. The association sued for a declaratory judgment that only licensed plumbers could make those installations.

The court never reached the plumbing question. The association itself wasn't a plumbing contractor. It didn't hold a license. It didn't install water heaters. Its "rights, status or legal relations" weren't affected by the ordinance — only its members' were. The Missouri Declaratory Judgment Act requires a plaintiff to have "a legally protectable interest at stake" — "present legal rights against those it names as defendants with respect to which it may be entitled to some consequential relief immediate or prospective." The association had none of those. It stood to gain or lose nothing from the outcome. Its members might benefit if the declaration went their way, but that doesn't give the association itself standing to sue.

The class-action theory failed for the same reason: you can't represent a class you're not a member of. The association didn't install plumbing. It couldn't step into the shoes of the individual plumbers even to litigate on their behalf.

The court quoted a principle that applies as clearly to modern contract disputes as it did to 1952 plumbing codes: "To challenge other public action, the plaintiff must usually have a direct personal interest likely to be squarely affected... a private citizen is deemed to have an insufficient interest in a declaration of what the law is."

What This Means for Modern Contract Disputes

This standing problem shows up in several recurring patterns that business clients encounter.

Trade association litigation. Trade associations — like chambers of commerce, industry groups, and professional associations — regularly want to go to court on behalf of their members. But unless the association itself has direct contractual rights at stake, or unless applicable law specifically authorizes associational standing (which varies significantly), the association may not be the right plaintiff. Individual members who are actually affected by the contract or ordinance in question may need to bring or join the case themselves.

Affiliated entity disputes. When contracts run between subsidiaries or affiliates in a corporate family, the entity that signs the contract is generally the entity with rights under it — and the entity with standing to sue for breach. A parent company that didn't sign may not be able to bring a direct breach claim even if its subsidiary's failure hurt the parent financially. (The guaranty question in Dunn involved the inverse: can the obligee enforce a guaranty when the named beneficiary was an affiliate? The answer there was yes — but only because the court could tell from the surrounding circumstances that the parent was the intended beneficiary.)

Third-party beneficiary claims. The Dunn case also involved a third-party beneficiary argument: could the Versatile dealers claim rights under a loan agreement between Ford New Holland and the Canadian government that mentioned a plan to "maintain the existing Versatile dealer network"? The answer was no — "only those third parties for whose primary benefit the contracting parties intended to make the contract may maintain an action," and "the terms of the contract must directly and clearly express an intent to benefit an identifiable person or class." The loan agreement's language didn't do that; it described a business plan with an explicit carve-out for legitimate dealer terminations. Incidentally benefiting from a contract doesn't give you rights under it.

Prevention: Getting Standing Right Before Filing

Identify who has the actual contractual rights. Before a dispute turns into litigation, work backward from the question: which entity or person has the contractual relationship giving rise to the claim? That's almost always the entity that signed the contract — not a parent, not an affiliate, not an industry group acting on their behalf.

Check whether the contract has a third-party beneficiary clause. Contracts sometimes explicitly name third parties as intended beneficiaries — "this agreement is intended to benefit [specific class]" — which creates enforceable rights. Absent that explicit language, claiming third-party beneficiary status is an uphill argument. Courts look for the contracting parties' intent to benefit the third party as the primary purpose of the agreement, not a side effect.

For associations considering litigation on behalf of members: The legal analysis for associational standing is more developed in some contexts (federal constitutional litigation, for instance) than in straight contract disputes. Before an association files suit over a contract or regulatory issue affecting its members, confirm whether the association itself has any direct stake in the outcome — and if not, whether any member wants to be a named plaintiff.

Structure the contract to match who will actually enforce it. If the parent company is the real party in interest on a major deal, the parent company should sign — or be named as an intended beneficiary, or the subsidiary's obligations should be guaranteed to the parent. The Dunn case shows that courts will sometimes look through technical naming errors to find the intended party, but "sometimes" isn't a drafting strategy.

The Common Thread

Across all five of these problem areas — ambiguous specifications, unclear payment caps, arbitration clauses undermined by amendments or not extended to guaranties, guaranties that name the wrong party, and claims brought by entities without standing — the root cause is the same. These disputes arose from documents that didn't fully close the loop: specifications that referenced standards designed for different situations, payment formulas that didn't say which payments counted, arbitration clauses amended without checking for conflicts, guaranties that incorporated by reference through implication rather than express language, and plaintiffs who sued on rights that belonged to someone else.

None of these problems are unique to large companies or sophisticated transactions. They show up in consulting agreements between two individuals, paint contracts on a bridge, and technology company separations just as readily as they show up in cement plant construction. And in every case, the cost of fixing the problem after a dispute arises — in legal fees, lost time, jury uncertainty, and the unpredictability of what "ambiguity construed against the drafter" will mean in practice — is far higher than the cost of addressing it before anyone signs.

Contracts are most useful as litigation-prevention tools. The cases discussed here represent what happens when language that seemed clear at signing becomes genuinely uncertain under the pressures of a real dispute — because the drafter assumed the other side would read it the same way, or because a later amendment created a conflict no one spotted, or because the right party wasn't identified clearly enough from the start.

Whether you're drafting a new contract, reviewing an existing one, or already in a dispute over language that's turned out to be less clear than it appeared, our attorneys work with businesses at every stage of the contract process — from initial drafting through negotiation to dispute resolution. If you have a contract question — about language you've been handed, a document you're about to sign, or an agreement that's already generating arguments — reach out. We're ready to help you close the loop.

This article is for informational purposes only and does not constitute legal advice. For advice specific to your situation, contact our attorneys today.