Arbitration Definition in Contract Law: An Overview

Arbitration is a legal process used to resolve disputes between parties outside of court. It is a form of alternative dispute resolution (ADR) that is often used in contracts. This article will provide an overview of the definition of arbitration in contract law.

What is Arbitration?

Arbitration is a process in which a neutral third party, called an arbitrator, hears evidence and arguments from the parties involved in a dispute and makes a decision. The arbitrator`s decision is binding and enforceable, just like a court judgment. Arbitration can be used to resolve disputes between two individuals, two businesses, or an individual and a business.

Arbitration vs. Litigation

Arbitration is different from litigation, which is the process of resolving a dispute through the court system. Litigation can be a long and expensive process, whereas arbitration is often quicker and less expensive. Parties can also choose an arbitrator who has expertise in the subject matter of the dispute to ensure that they receive a fair and informed decision.

Arbitration also provides a more private and confidential process for resolving disputes, as the proceedings are generally not open to the public. In contrast, court proceedings are open to the public, and court records are available to anyone who requests them.

Arbitration in Contract Law

Arbitration is often included in contracts as a means of resolving disputes that may arise between the parties. This is known as an arbitration clause, which is a provision in a contract that requires parties to submit future disputes to arbitration rather than going to court.

Arbitration clauses are a common feature of many commercial contracts, such as employment agreements, supply agreements, and franchise agreements. These clauses can also be found in consumer contracts, such as credit card agreements and cell phone contracts.

Arbitration clauses are typically included in contracts to provide a faster, less expensive, and more private method of dispute resolution. They can also be used to avoid the uncertainty and unpredictability of court proceedings.

Enforcing an Arbitration Agreement

To enforce an arbitration agreement, the party seeking to compel arbitration must file a motion in court. The court will then review the agreement to determine if it is valid and enforceable. Some factors that may render an arbitration agreement unenforceable include fraud, duress, or unconscionability.

If the court determines that the arbitration agreement is valid and enforceable, it will order the parties to proceed to arbitration. The arbitrator will then be selected according to the rules set forth in the agreement, and the parties will present their case in front of the arbitrator.

Conclusion

Arbitration is a legal process used to resolve disputes between parties outside of court. It is often included in contracts as a means of providing a faster, less expensive, and more private method of dispute resolution. If you are involved in a contract dispute, it is important to consult with an experienced attorney who can help you understand your rights and options under the agreement.