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Published on behalf of Borneo Martell Turner Coulston Solicitors.
A CONTRACT is often compared to an insurance policy; you hope you never have to make a claim. Similarly, you hope you will never need to consult a commercial contract because things have not been going to plan.
“Dispute resolution clauses are not a ‘one size fits all’ option,” said Tom Bodkin, a solicitor with Borneo Martell Turner Coulston in Northampton. “Which clauses, if any, to include will very much depend on the bargaining power of the parties, the contract value and other factors.”
Choosing the right dispute resolution clauses for your commercial contract requires evaluation of the benefits and advantages of each option with respect to the parties’ bargaining power and terms of the contract. This is why it is important to seek legal advice to protect you in the contract and to ensure you have the right dispute resolution mechanisms built in.
Borneo Martell Turner Coulston’s team of experts can help you to navigate this often-overlooked element of commercial contracts.
Tom outlined the two main alternatives to litigation and some of the key considerations when negotiating these clauses.
Arbitration and mediation are the most common types of alternative dispute resolution clauses included in commercial contracts. The aim of each is to avoid the expense and time of taking the dispute to court:
- Arbitration means that an independent person is appointed to make a legally binding decision to resolve the dispute without the need to bring a claim in court. The parties will need to pay for the appointment and have to accept whatever determination is made, without the right to appeal.
- Mediation offers the chance for the two parties to negotiate a resolution in the presence of a mediator who facilitates the discussions. They will be more focused on helping the parties to reach some agreement through compromise.
Without clauses that encourage dispute resolution prior to going to court, the default position would be that the only option would be litigation.
Some parties may consider it is more reliable to have a judge consider the facts and for the law to be properly evaluated and determined in court rather than rely on an industry expert who may or may not be familiar with the nuances of the law or contract.
Either way, seeking legal advice on your options while negotiating the contract is important.
For further information, contact Tom Bodkin in the corporate and commercial team on 01604 622101 or email
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.