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Should your next business contract include a mediation clause?

On Behalf of | Sep 1, 2022 | Business & Commercial Law, Business Litigation

Whether to arbitrate or litigate is a question that often comes up when a business dispute arises.

Mediation is a form of Alternative Dispute Resolution (ADR) that could find a place in your next business contract due to its advantages over litigation.

Allowing options

ADR can refer to either arbitration or mediation. However, where arbitration results in a binding decision, mediation does not. If you and the other party cannot reach a satisfactory settlement through mediation, you still have the option of going to court to resolve your dispute.

Choosing privacy

Whereas litigation is a public process, mediation is private. You and the other party will meet with a neutral third party, a mediator, whose goal is to facilitate negotiations and keep the discussions on track in a more relaxed atmosphere outside of court. Mediation is best suited to parties agreeable to settling their differences through open communication.

Looking at costs

In addition to attorney fees and court costs, litigation requires subpoenas, depositions, requests for documents and other add-ons that make this option for settling a business dispute exceedingly expensive. Litigation may be a lengthy process, which adds to the cost. Mediation brings closure to a business dispute much faster than litigation and is therefore a more economical choice.

Going forward

No one wins or loses in mediation. The only outcome is one that you and the other party can agree on. Many business contracts contain a clause about the possibility of mediation to resolve a dispute. Should yours be among them? Remember that if you cannot sort out your differences through mediation, you are still able to take your case to court.