Should We Include Dispute Resolution Clauses in Contracts?

Chess.jpgBusiness disputes can prove to be contentious, costly, and complex, whether they stem from contract violations or lease negotiations. Rather than devote massive business resources to a lengthy trial, many business owners in Minnesota would prefer faster, more efficient ways to resolve a dispute.

If this is of interest to you, then you might have questions regarding whether to include dispute resolution clauses in your business contracts.

What are dispute resolution clauses?

As discussed in more depth in this article, alternative dispute resolution (“ADR”) clauses specify the type of resolution method parties will follow in the event of a dispute. For example, they might state that the parties will resolve issues through structured methods like mediation or arbitration. ADR allows parties to maintain some control over disputes and attempt to prevent unnecessary fallout.

Are they always necessary?

ADR clauses can be very helpful and provide fast, consistent guidance in the event that parties have a conflict. However, they are not necessary–or helpful–in all situations. Parties might feel like adding in a blanket ADR clause in all contracts is a good way to protect themselves, but ADR clauses can ultimately be irrelevant or ill-fitting to the relationship; they could also be a red flag for other parties who wish to be more flexible in terms of dispute resolutions, or who are resistant to waiving their right to a jury.

Negotiating contracts with ADR clauses

Because of all that could be at stake in business contracts, it is crucial to review these legal documents thoroughly and with the help of an attorney. Should concerns arise involving ADR clauses or any other provision, an attorney can help negotiate fair, enforceable terms.

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