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Binding arbitration clauses aren’t the only way to avoid court

On Behalf of | Jun 3, 2022 | Contract Disputes

Whether you primarily execute contracts with new employees as you hire them or with clients as they hire you, including the right terms is key. A well-drafted contract will increase the benefits your business derives from the agreement while also protecting you from future issues and losses.

Often, the main focus in contracts will be the obligations that each party will have to one another, including financial obligations and timing expectations. However, it is also important to think about what will happen if a conflict arises in the future.

You can address contract disputes before they occur

For decades, big businesses have added mandatory, binding arbitration clauses to their contracts to prevent any issues from going to court. In recent years, businesses have started to shy away from dispute resolution clauses, possibly because of the negativity around mandatory binding arbitration requirements. Customers and employees alike may avoid signing contracts that limit their right to take legal action or force them into binding arbitration.

Your organization can limit contractual conflicts without making itself look bad by forcing every employee or client into mandatory arbitration when problems develop.

You have options for conflict resolution

The problem with mandatory, binding arbitration is that it takes all choices away from the other party. They don’t have any choice about how to resolve the issue or any way to fight back if they don’t agree with the outcome.

A good workaround may be a clause requiring that they attempt mediation or arbitration with your company at their discretion prior to initiating legal proceedings. That way, both parties have an opportunity to sit down and discuss matters outside of court. Additionally, you don’t have to worry about start worrying your relationship with prospective employees and clients including terms that they find frightening.

Including dispute resolution suggestions or requirements in your contracts helps you to facilitate settlement when there is a disagreement between you and another party. Although many business contract disputes settle before their day in court, even having a pending court case can do damage to your reputation.

Integrating the right protections into your business contracts now will help your business minimize what disputes arise and how expensive they will be for you to resolve.