Wednesday, April 05, 2006

Arbitration Clauses

Home contractors and homeowners should consider whether they want to insert arbitration clauses into their contracts. Arbitration usually offers a quicker alternative to litigation. It can also be a less expensive process if the parties agree to keep to a timetable and limit discovery. Some states, such as Massachusetts, have home improvement contractor arbitration programs. It is assumed that homeowners have the right to arbitrate if they satisfy certain requirements, but contractors who want this right must insert an arbitration clause into their contracts. The parties should also consider where the arbitration will be held, which state's laws will apply, and whether any particular arbitration companies will be used. Making agreements about these issues in advance helps to prevent problems later on. One must keep in mind however, that arbitration is usually binding, and the right of appeal is very limited. So, be careful to read the contract and think about whether arbitration would be suitable for your given arrangement.

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