Well-constructed contracts are often the backbone of successful California businesses. You can use them to define the terms of your associations with employees, vendors and other parties.
One thing you shouldn’t overlook when creating or signing business contracts is defining how to address disputes (breach of contract, etc.). Adding a dispute resolution clause to every contract you sign prevents uncertainty and helps you avoid business litigation. You can choose from several forms of alternative dispute resolution (ADR).
Arbitration is usually effective
One of the most popular forms of ADR is arbitration. An unbiased arbitrator agreed upon by the involved parties listens to each side of the dispute and then decides how to resolve the matter. Business owners like arbitration because it usually costs less and takes less time than litigation.
Mediation is becoming popular
More companies are choosing mediation as their primary form of ADR because it is efficient and cost-effective. Like arbitration, it involves an impartial third party who hears each side of the dispute. The mediator assists the involved parties in negotiating a fair and reasonable resolution to their disagreements.
Minitrials can resolve business disputes
Arbitration and mediation remain the two most common methods of resolving business disputes, but minitrials can work just as well. A panel of management personnel selected by each side hears and helps resolve the issue, often through additional negotiations. ADR clauses in contracts may not protect your company from all business disputes. However, they can help you address contract breaches without going to court.
If a full-blown trial turns out to be the only solution, don’t try to handle it alone. Professional legal guidance and insight into California business litigation can strengthen your side of the dispute.