Contracts are what keep your business running. New York business owners depend on contracts to ensure everyone understands their requirements and knows what they need to do.
Almost every business owner faces a contract dispute at some point. When you find yourself in this situation, it helps to know your options before deciding how to handle it.
There are three main options for resolving contract disputes: arbitration, mediation and litigation.
Arbitration
Arbitration is a common option. In fact, some of your business contracts might already contain an arbitration clause. This is language that requires you and the other party to participate in arbitration when a dispute arises.
Arbitration is a semi-formal process. It is not as formal as traditional litigation, but the procedure is similar.
In arbitration, you and the other party meet with an arbitrator. You each have a chance to present your case through evidence such as testimony, witnesses or documents.
At the end of the arbitration, the arbitrator decides the outcome, which is binding. The arbitrator will likely not decide that same day. You may receive your decision days or weeks later.
Mediation
Mediation is like arbitration, with a few differences. It is usually a little less formal and a mediator does not have the power to decide “who wins.”
Rather, a mediator serves as a neutral whose purpose it is to guide you and the other party to your own resolution that you are both satisfied with.
It is important to realize that in contract disputes, no party usually walks away happy and feeling like they got everything they wanted. A resolution is probably going to require some compromise from everyone.
Litigation
There are situations where you cannot resolve your contract dispute through either of these methods. Traditional litigation is your remaining option. This involves taking your dispute to court and having a judge decide the issue.
There is no right or wrong option, and the best option often depends on the specific situation. Business attorneys can advise you on the best approach for you.