What is the arbitration clause in a contract?

An arbitration clause in a contract is a provision that requires parties in a dispute to settle their differences through arbitration, rather than through the court system. In Delaware, the Delaware Uniform Arbitration Act governs the resolution of disputes through arbitration. This Act provides that the parties to a contract may agree to submit their disputes to arbitration and that the decision of the arbitrator is binding and final. In general, the arbitration clause will specify which state’s law will be used to resolve the dispute, the nature of the dispute that can be submitted to arbitration, and the procedure to be followed in the arbitration proceedings. The Delaware Uniform Arbitration Act also allows for the parties to agree to have the arbitration conducted under the rules of an alternative dispute resolution organization. For instance, the American Arbitration Association (AAA) provides the rules and procedures for commercial-related disputes. Thus, if the parties have agreed to AAA rules then AAA’s procedures must be followed. The arbitration clause in a contract is an important part of the agreement and should be understood by both parties before entering into the contract.

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What is the arbitration clause in a contract?

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