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Should your contract include a mediation or arbitration clause?

| May 3, 2021 | Contract Disputes

When you create a construction contract, you should ensure that it protects your best interests while also offering your clients some protections. The contract should specify the scope of the project, payment terms and similar matters. The more detailed the contract is, the better protection you have if there are problems in the future.

On top of those basic items, the contract you use with your clients should also include details about the conflict resolution method that you’ll use if something goes amiss. Your choice may help you avoid having to go through a lengthy lawsuit. Many contractors choose to include a stipulation that both parties will handle any disputes that arise through mediation or arbitration

How do mediation and arbitration differ?

Mediation is a collaborative process that requires both parties to negotiate the terms of the resolution. The mediator doesn’t make decisions about the case, so there’s a chance that both parties won’t resolve their issues if there’s a deadlock. This could lead to a need for another resolution method

Arbitration is a bit like a trial. Both parties must present their side of the matter to the arbitrator. The arbitrator then issues a decision about it based on the evidence and facts presented during the session. Any decision that an arbitrator reaches is both legally binding and final.

Ultimately, you’ll need to choose the dispute resolution strategy that’s best for your business. Working closely with your attorney can help you to determine what to include in the contract. A lawyer can also work with you to protect your business if there’s ever a dispute with a client or anyone else involving your company.