Mediation Clauses in Business Contracts

Many of the contracts you use in your business will have a clause or provision addressing dispute resolution in the event a disagreement arises under the contract.  Some contain a provision requiring the parties to attempt mediation before bringing a claim in court or arbitration.  Here are a few things you should know if you are considering such a provision:

• Mediation is simply a structured way to attempt mutual resolution of a dispute.  A mediator does not decide who is right- he or she just helps facilitate a settlement discussion.
• Mediation, even if you agree to try it, is essentially a voluntary process- even if you have a mediation clause in your contract, you are only bound to attempt in good faith to settle a dispute- you are not bound to accept any particular result.
• If you use a certified mediator, the information shared in the mediation is strictly confidential and cannot be used by either party in a later court or arbitration proceeding.

• Over 97% of civil cases that are filed in court settle at some point prior to trial.  This means if you have a dispute it is likely to settle eventually, so in most cases there is little risk to trying to settle a dispute even before it goes to litigation.

Learn more here about mediation.

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