Forums: Discussions for entrepreneurs and small business.

Looking for some feedback about whether its a good idea to insert an arbitration clause in my contract.  I was reading some articles on this subject. 
It sounded like a good idea at first thinking it would save money and time if
a lawsuit did arise.

The other side of the coin is that once a decision is made - there is no appeal.  So to increase your chances of winning your case you should hire an attorney  to help you win your arbitration case.

So I am wondering what Sun members are doing? Do you have an arbitration clause in your contract or do you think you are better off without one? 

All feedback is greatly appreciated. Thanks

I think arbitration clause is a good idea, except attorneys who draft contracts don`t normally put that in, as they prefer lawsuits to make more legal fee.  Interestingly, for their own retainer contracts, attorneys do have arbitration clause.

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Thanks Innovator for your comments
That is very interesting!

Depending upon the business of my client, I may or may not recommend arbitration clauses in their contracts.  Arbitration clauses can also be drafted in many different ways, including the ability to appeal the arbitrator`s decision to a court, or to make it binding, without an opportunity to appeal.

For my clients that are in the high technology business, or who are providing intellectual property to their customers, arbitration is not always a good option, since you potentially lose the ability to collect certain damages that would otherwise be available to you in court.  Also, arbitrators tend to "split the baby," so that sort of result is not always in a client`s best interests.

There are also various other considerations (place of the arbitration, the number of arbitrators, the rules the arbitration must follow, what sorts of claims are not subject to arbitration, etc.) so these types of clauses in contracts must be handled carefully.


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Thanks pepperlegal - I knew about some of the things that you mentioned but
I did read that a case was binding and could not be appealed - unless a judge
decided it could be!  I  am looking for something to protect my business in case of a lawsuit where it wouldnt cost me a lot in legal costs.
I would have some protection since I am a registered LLC. Just trying to do all that I can now and not regret anything later on if something happens.