Jesus was the model of grace, and yet He wasn't afraid to rebuke others. Chuck Swindoll gives suggestions on how to know when it's time to correct someone graciously.
Conflict is a fact of life. People have different motives, methods, perspectives, and desires. Some of these are sinful some are not. In fact trying to live a godly life in a sinful world will create conflict. Conflict per se isn't necessarily bad. But we have a problem when conflict stems from, is expressed with, or remains unresolved, because of sinful motives, attitudes, or actions.
God's Word addresses conflict with real practical direction aimed at our motives, attitudes, and actions.