Faster Payment with an Arbitration Clause?

Should You Use an Arbitration Clause?

There’s a rumor going around that if you agree to arbitrate, you can get paid faster. True? Well, actually, we’ll give you a true “lawyer” response . . . .it depends.

What is Arbitration?

Arbitration is a way of resolving a dispute without using the court system. In the court system, a judge who is paid by the government decides who wins the dispute. In arbitration, a private person, who is paid by the parties, decides. Like court, you can present the facts to the arbitrator in a hearing. The arbitrator then makes a decision.

What Is an Arbitration Clause?

A clause is language in a written contract. An arbitration clause says that if you have a dispute about the agreement that the dispute will be resolved by arbitration. Sometimes it will require that your arbitration occur before a certain group, such as the American Arbitration Association. Sometimes, it requires a panel of arbitrators. This means that there are usually three arbitrators. This is not as common as it used to be because of the costs.

Will an Arbitration Clause Help Me Get paid Faster?

Sometimes. (Sorry, there’s no black or white rule here.) An arbitration can take less time to get decided than a court trial. Also, the parties can agree to shorten the process and limit the issues to be decided. On the other hand, if the arbitrator you like has a full schedule (and most of the better arbitrators do), it may take a long time to get your hearing. Because both sides have to agree on the arbitrator, it could take longer to make those decisions.

Also, if you can take advantage of some prejudgment remedies, like a prejudgment writ of attachment, with a lawsuit for breach of contract, that may be more effective and help you get paid faster.

While there can be advantages to have an arbitration clause in your agreements, it does not guarantee that you will get paid faster.

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