Contracts disputes in Arkansas and Tennessee may occur between businesses, individuals, or even businesses and individuals. These disputes occur when the parties to a contract no longer agree on the nature of its terms. For example, they may disagree as to what each party’s obligations are, or they may argue over what a term’s definition is. Regardless, contracts disputes are resolved much sooner when the parties have a dispute resolution clause. A dispute resolution clause describes how the parties will attempt to resolve their dispute. For example, the parties may agree in advance that, should a disagreement occur, they will attempt mediation or arbitration before filing a lawsuit over their dispute or go to arbitration in lieu of a lawsuit and a trial in court.
Both mediation and arbitration require the consent of the parties before they may be scheduled. Therefore, the dispute resolution clause serves as evidence of consent to one or both of these practices. By the time a disagreement occurs, it is unlikely that the parties will be able to agree as to how they should resolve their conflict. With a dispute resolution clause, however, the parties know what the next step will be.
Dispute resolution clauses also include additional detail, such as where arbitration or mediation will be held. With arbitration clauses, the parties may agree in advance as to how many arbitrators will arbitrate the dispute and whether it will be binding or nonbinding. Additionally, these clauses may provide how the fees of arbitration or mediation will be divided between the parties.