Even with the best businesses and organizations, it is inevitable that at some point in time, they would have to deal with legal issues. These issues can cost valuable effort, time, and resources. As a business owner, you would rather choose to keep such disputes out of court as this is the best way to limit your legal fees along with the inconvenience of attending court hearings. An arbitration agreement is a solution to such a problem. Chances are, you may even have already signed this document even without realizing it.
Arbitration refers to a process of settling a dispute without filing a lawsuit or going to court. In many ways, an arbitration proceeding has similarities with a court case as both involve the services of lawyers, an exchange of information, and hearings. After both sides speak, the arbitrator can make their decision.
However, this process is a lot more informal compared to litigation and its procedures are much simpler. In an arbitration case, the parties don’t have that much right to get information or documents from each other. But one important document used here is an arbitration letter or agreement.
In general, the venue for an arbitration hearing is usually held in a conference room instead of a courtroom. The arbitrator can be a retired judge, a lawyer, or someone who has the experience for this particular industry.
Typically, an arbitration agreement is a clause in a longer contract in which parties agree to settle their dispute without going to court. These types of agreements are very common in employment and consumer contracts.
They can also come in the form of proposed additions to contract negotiations so that you and the other party can avoid the risk of lawsuits. Many businesses require employees and customers to sign an arbitration agreement sample as this move reduces the costs while improving the efficiency of dispute resolutions.
Unfortunately, because arbitration clauses typically appear as “fine print” in longer contracts, many of those who sign these agreements don’t even realize they’re doing so.
When compared to a lawsuit, arbitration is less expensive, confidential, and short. Courts are usually inclined to refuse to overturn arbitration decisions and might even interfere to ensure that the decisions get enforced.
This means that the decisions made by arbitration are final outcomes that allow the contending parties to move forward, without having to face the public scrutiny that usually comes with court trials.
Furthermore, arbitration allows for more flexible and creative rulings than those issued by civil courts. For instance, if you sue a former employer because of wrongful termination, the court will only award you monetary damages. An arbitration, on the other hand, instead of or in addition to awarding monetary damages can also get you reinstated.
Lawyers often recommend arbitration to their clients as the best and quickest way to resolve their claim. In arbitration, you submit your dispute to the arbitrator then they will come to a resolution after both parties have made their presentations.
In most cases, aside from the documents you submit, your lawyer and the other party will make oral arguments on your behalf. There could also be instances where presentations may include witnesses. There are many reasons for you to opt for arbitration with an arbitration agreement:
A trial and arbitration do share some similarities, like presenting evidence and making opening statements. But arbitrations can get completed a lot quicker and aren’t as formal. For instance, you don’t have to follow federal or state rules of evidence and sometimes, the arbitrator isn’t required to follow the governing law.
The arbitration process, whether it involves an arbitration agreement could either be non-binding or binding. In the case of the latter, the decision rendered is a final one. A court can enforce it and you can only appeal on very limited grounds.
For a non-binding arbitration, the arbitrator’s award is only advisory and only becomes final if you and the other party accept it.
In general, employers ask their employees to sign an arbitration agreement. Refusing to sign this could put your employer’s job at risk. In most cases, an employer might revoke their offer of employment if you as a prospective applicant refuses to sign the arbitration agreement form.
Moreover, an employer can also terminate you if you refuse to sign one as an employee. This means that a refusal to sign the agreement might put your employment at risk. However, there are some employers who will negotiate this point, especially if they feel more excited about taking you under their employment than they are about arbitration.
This is especially true when you are a highly-sought after applicant or if you are a valued employee in the company. The employer may permit you to refuse to sign any arbitration agreement examples rather than lose you.
Another option is for you to agree to sign only if you get a chance to negotiate an agreement that’s fair to you. If your employer will not allow you to refuse to sign, you can try to negotiate some of the terms of the agreement that will make it more advantageous to you.
It is always possible that your employer won’t agree to your requests, but it is also unlikely that you will get fired for asking. Your attempt to negotiate the agreement to arbitrate isn’t any different from discussing your benefits or salary. Remember that your employer wants to negotiate for their best interest and so should you.
If necessary, you might have to consult with a lawyer to negotiate the fairest agreement possible. Here are some things to think about when making negotiations:
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