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Misunderstanding, or misconstrual, is a major exacerbating factor in conflict escalation and an impediment to negotiation and resolution. Laboratory work has identified characteristic errors of construal which partisans make in assessing the views of their opponents. This paper examined whether these same phenomena could be observed in a traditional real‐world conflict, that between trade unions and management. In two studies, union representatives and managers reacted first (in Study 1) to an actual contract negotiation that the two sides were involved with, and then to a hypothetical unjust act. Results revealed that the two sides indeed display many characteristic errors of construal. Specifically, union representatives underestimated management concern for harmful acts against workers, or management's sincere wish to negotiate in good faith within financial constraints, and were generally highly suspicious of management motives and intentions toward workers. Managers saw union representatives as unreasonable, and greatly overestimated union militancy and unwillingness to accept extenuating circumstances. Negotiations will be greatly improved if such misconstruals can be exposed and debunked prior to, or during negotiations.

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