Alternative approaches to contract dispute resolution

| Feb 2, 2021 | Business Law |

Lawsuits over alleged breaches of contract in New York and around the country can be prohibitively expensive to litigate and drag on for years. They also take place in a courtroom, which means the matters discussed become fodder for public consumption. Dispute resolution methods that allow parties to avoid court have become popular as they save time and money and keep matters private, and the two most popular alternatives to a civil trial are arbitration and mediation.

Arbitration

Arbitration is similar to a trial that takes place behind closed doors. Instead of judges, arbitrators or a panel of arbitrators preside over arbitration proceedings. Lawyers may be present, and they can call witnesses, make arguments and introduce evidence. There are no established rules for arbitration, which means disputing parties can set their own. This means evidence that a judge would not allow could be admissible in arbitration. Many contracts include arbitration clauses, and they often stipulate that the arbitrator’s decision will be binding.

Mediation

Mediation is a less adversarial dispute resolution method. Instead of maintaining order while disputing parties battle it out, mediators take a more active role. Rather than handing down decisions like arbitrators or judges, mediators listen to what the parties have to say. They then encourage disputing parties to find common ground and work toward a compromise. When mediation is successful and an agreement is reached, the parties enter into a contract to abide by the terms.

Avoiding contract disputes

Bitter contract disputes often begin as simple misunderstandings. Attorneys with business and commercial law experience may seek to avoid battles by drafting contracts that make the rights and obligations of both parties clear. Attorneys could also suggest including provisions designed to ensure that any disputes that do arise are resolved quickly, privately and fairly.