The Chicago business litigation lawyer at Ellis Legal explains that there are pros and cons to including an arbitration agreement in your contracts. Whether an arbitration agreement is best for you depends on who you are and your situation. But if you do decide to include an arbitration provision, you want to make sure that it’s enforceable and that the language in your contract does what you need it to do.
Why So Difficult?
Arbitration, and arbitration agreements are controversial because you are taking away basic rights from the other side (and from yourself, but you’re the one opting for arbitration by including it in your agreement).
These rights include things like the right to a jury, the right to have your case decided or heard by an elected judge, or the right to engage in the full breath of discovery that you would normally have under the rules of procedure.
Make it Clear
If your arbitration agreement is on its own, as a separate agreement, on a separate document, great. But if it is included as part of a larger contract, don’t bury it. The arbitration agreement should be bolded, highlighted, or set forth in a way that the other side sees and acknowledges it.
You can give a short description of arbitration, but you need not give a whole primer on the ins and outs of arbitration; a general statement that the rights to a jury are being waived, should suffice.
If you plan on doing a lot of arbitrations, you do have the right to talk to, and interview, arbitrators and arbitration companies. If you do that, you want to also include the name of the arbitrator or company that you want to use.
Fees, Costs, and Location
While you can have a “prevailing party pays attorneys fees provision” in your arbitration agreement, you should not make the other side pay all of the other expenses of arbitration, such as the arbitration fees.
For those who may be geographically distant from you, you don’t have to arbitrate where they are, but you should have a reasonable distance where the arbitration will take place—for example, within 100 miles of your office or anywhere you have an office.
In other words, when it comes to cost, and distance—be reasonable. Don’t “punish” the other side by making them do all the traveling and paying all costs (although you can make them pay costs, if they lose the case).
No Alteration of Damages
Your arbitration agreement should never waive any substantive rights the other side would have or alter the damages that are otherwise receivable under any law or contract.
So, for example, if a law says that the prevailing party pays the others’ attorney fees, your arbitration agreement should not say that only you get attorney fees. If a statute says that the winning party gets double the amount of damages, your arbitration agreement shouldn’t take that right away.
Speak with a Chicago business litigation attorney at Ellis Legal at (312) 967-7629 today to make sure your contracts are enforceable and do what you need them to do.