What is the arbitration clause in a contract?
An arbitration clause is a provision in a contract that requires parties to resolve disputes through arbitration instead of litigation. In California, arbitration is a form of alternative dispute resolution, and it is legally binding in most cases. In arbitration, parties agree to have a neutral third party make a decision over the dispute. Typically, in arbitration, the parties select an arbitrator to help them resolve the dispute. The arbitrator then listens to both sides, hears the evidence, and makes a decision. This decision is legally binding and enforceable in court. An arbitration clause in a contract will usually outline the process for selecting an arbitrator, the rules of the arbitration process, and any applicable laws or rules. The clause should also include information about who will pay for the arbitration costs. When negotiating an arbitration clause in California, parties should also include an agreement on how to modify or terminate the clause. This will help ensure that the dispute can be resolved in a manner that is fair and equitable for all parties. In summary, an arbitration clause in a contract is a provision which requires parties to resolve disputes through arbitration instead of litigation. An arbitration clause should include information about the selection of an arbitrator, applicable laws and rules, and who will pay for the arbitration costs. Additionally, parties should also include an agreement on how to modify or terminate the clause in order to ensure that the dispute is resolved in an equitable manner.
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