|
In any business,
disputes happen. Getting the issues resolved is
critical so that the parties can minimize disruption
to their business. Effective dispute resolution
can also preserve beneficial business relationships.
Going to court to resolve a business dispute is a costly, lengthy, adversarial
process that is unlikely to produce a satisfactory resolution. So, unless
your dispute is less than $2,000 and eligible for Small Claims, you are
much better off using alternatives to litigation.
Mediation
In mediation, a neutral person helps the parties
to define the issues in dispute and facilitates
the discussion of the issues and settlement options. The
mediator has no authority to make a decision.
Mediation works when the parties want to resolve the dispute.
Mediation can be formal or informal.
-
Formal mediation
involves hiring a professionally trained mediator who
is knowledgeable in the area of business at issue (e.g.,
construction matters, business valuations), usually
under the auspices and guidelines of an organization.
-
Informal mediation
involves working with a neutral party, who is respected
by both parties to the dispute.
Mediation Process
The mediation process usually involves each of the parties writing to
the mediator about their view of the dispute. Then the parties meet,
together with the mediator, and clarify the issues in dispute. The
mediator runs the meeting so that all points of view are heard and the
issues are discussed objectively. Then the parties meet individually
with the mediator and the mediator shuttles back and forth between the
parties working out the details of a resolution. Many mediations
are completed in half a day or less and the outcome is a mutually agreeable
settlement.
Arbitration
Arbitration is a more formal process conducted under the 'rules' of an
organization such as the American Arbitration Association, International
Arbitration Rules, or Chambers of Commerce.
Arbitration is frequently used for international
contracts and the 'rules' are less formal than litigation. The
merits of the dispute are evaluated by independent
people who usually have expertise on the subject
matter, and the decision may be binding.
Dispute Resolution Provisions in Contracts
A contract isn't worth the paper it's written on if it isn't enforceable.
However, enforcing an agreement through the court system is unrealistic
for many businesses because of the expense and delays of the court system.
It's good business practice to include a provision in your contracts, that
says:
'In the event of a dispute, the parties agree to
use mediation to resolve it. If mediation is
unsuccessful, the parties agree to binding arbitration.
The parties agree that arbitration proceedings will be conducted in Boston,
Massachusetts, in accordance with the American Arbitration Association
rules, and the parties will share the expenses equally.'
In conclusion, including contract provisions for mediation and arbitration
are good ways to protect your interests in the event of a dispute.
Jean D. Sifleet, Esq., CPA
Business Attorney & Consultant
120 South Meadow Road
Clinton, MA 01510
t. 978-368-6104
f. 978-368-6105
|
