What did the founders mean when they wrote "to form a more perfect union"?

The key word is "more". Keep in mind the government being formed during the convention was to be a central govt'. The preamble was used to "sell" the ideas of the new system ... the Articles of Confederation to many was a perfect form of govt. This new one was to be more perfect. Basically strengthening those areas that were causing economic and political problems

"A court system would be formed to resolved disputes between citizens" would be the best option, since they envisioned the country evolving to tackle more difficult problems.