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Mandatory binding arbitration clauses are sometimes hidden

On Behalf of | Oct 24, 2018 | Construction Law

Some construction contracts have clauses that limit how you can try to get compensation if something goes awry with the project. One of these is that you might have agreed to go through arbitration to address any issues. Arbitration is a process in which you present your case to a third-party arbitrator. That person is impartial and has to make decisions based on what is presented. The process is similar to a court hearing, but it is less formal. There isn’t a jury; however, you might be presenting your case to a panel that acts as an arbitrator. When you sign the contract, check the terminology that is included. If you see the term “mandatory binding arbitration,” this means that you don’t have an option to bypass the arbitration and that the decision of the arbitrator is final. You can’t appeal it or try to have it tossed out. There is a chance that this clause might be hidden deep in the contract. This is one of the reasons you should read through the entire contract when you are trying to hire a contractor. If you notice that you can only resolve matters through mandatory binding arbitration, know that you are signing away your right to sue the contractor if the project isn’t completed per the specifications in the contract. It is always best to ensure that the contract you sign protects you. Sometimes, contractors will try to push off contracts that only protect them. You don’t want to have to deal with this, so making sure you understand what you are signing is imperative.

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