Contract dispute resolution has become an important aspect in the negotiating process. Objective and effective contract dispute resolution can reduce the high transaction cost and time in the negotiation process. This paper proposes a principle-based contract dispute negotiation system based on expert system and knowledge resource space model (KRSM). The system provides an accurate and objective discriminant model to determine which party is responsible for the loss from the dispute. The case of a construction contract proves the practicality of the proposed system, which provides guidelines for the contract dispute resolution in construction industry.