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Do you have to use arbitration for a contract dispute?

Arbitration is an effective method for resolving disputes. Many contracts include an arbitration clause so that both parties know that they will not be sued but instead will go to arbitration if there is a problem.

Arbitration is beneficial for a few reasons. First, it has the potential to cost less than going to trial. Second, you don't have to go before a judge for a trial, which is time-intensive and disruptive. It does have some downsides, too, which is enough for some people to avoid signing contracts with these clauses included.

Arbitrators receive a fee from the party that is making a complaint before the case is heard. They are also paid as the case is heard. There are times when arbitration can end up costing more than going to trial, which is something to be aware of if you are signing a contract with an arbitration clause. Additionally, arbitration clauses often make you give up your right to have the case heard in court, so you won't be able to sue if you don't like the outcome of the arbitration session.

What should you do to make sure you sign the right type of contract?

Before you sign any contract and agree to arbitration or mediation as an alternative to going to court for a dispute, it's a good choice to discuss the benefits and pitfalls with your attorney. You want to leave as many options open for yourself as possible if there is a dispute, and arbitration clauses can sometimes limit your ability to seek help during disputes with another party.

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