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Arbitration Agreements: Benefits and Detriments

There are two venues for dispute resolution:  Court and Arbitration.  The default venue is court.  However, parties can always agree to binding arbitration.  Both parties must agree to arbitration; if not, court is the necessary venue.


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Arbitration is superior to court in a number of ways. 

- The arbitration process is much quicker than court,
- Cost of an arbitration is usually substantially less than court
- Proceedings are less formal. 

Arbitration can be thought of like a very sophisticated conciliation court or a very informal trial court.



The savings of arbitration compared to court may invoke the "penny smart, pound foolish" adage however.  The downside to arbitration is:

-  the inability to fully investigate and uncover the facts.  Written discovery, such as interrogatories, can elicit significant information and bind the adverse party to a set of facts. More importantly, depositions are not usually permitted in arbitration proceedings.  A deposition is a party's best chance to see the witness perform under pressure and hear the unfiltered story.



The election for arbitration is not always the best choice.  I use certain criteria and client input to recommend whether an arbitration agreement is wise to request and include in an agreement.  Please contact me to discuss arbitration agreements and whether you should be including them in your contracts.


The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.





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