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Arbitration binding?

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R

Rachel in TX

Guest
We're negotiating a custom home build in TX and the builder has furnished us with their standard contracts. We've had the contracts reviewed by a real estate attorney, but I didn't think to raise this question with him.

Is arbitration binding by definition? There's a clause in the contract that sounds reasonable to me (I've quoted it below)since it doesn't say that the arbitration is binding, so it seems that it just requires that we explore other alternatives prior to suing. Is this so?

'The parties hereto agree that should any dispute, controversy, or claim arise between them with respect to any matter relating to this Contract, which cannot be resolved by the mutual, good faith negotiations between the parties, such dispute shall first be submitted to mediation before a mediator mutually agreed upon by the parties. In the event a mediator is not mutually agreed upon or the mediation does not occur for any reason within 60 days of one party's written request to the other party to mediate or such mediation is unsuccessful in resolving any or all of the dispute, the parties agree to then submit such dispute to arbitration before an arbitrator licensed and approved by the AAA and such arbitration shall be conducted in accordance with the rules and regulations promulgated by the AAA. Neither party shall be entitled to bring or cause any dispute to be raised before any federal or state civil court or tribunal, each party hereby waiving its right to do so, prior to, in good faith, exhausting the modes of resolution set forth herein'.

Thanks,

Rachel
 


T

Tracey

Guest
Personally, I think mediation clauses are great & arbitration clauses are useless for you. If a case is going to settle, it will settle in mediation. Since the arbitration is non-binding, either party can just ignore the decision & file suit. All it will do is run up costs. Also, arbitration favors repeat players -- parties who arbitrate over and over again. An arbitrator is chosen by the parties. This gives the arbitrator incentive to keep the repeat players happy so she'll get more cases. I'm sure HomeGuru would never do this, but some would. :)

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This is not legal advice and you are not my client. Double check everything with your own attorney and your state's laws. [email protected] - please include some facts so I know who you are!
 

HomeGuru

Senior Member
<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by Rachel in TX:
We're negotiating a custom home build in TX and the builder has furnished us with their standard contracts. We've had the contracts reviewed by a real estate attorney, but I didn't think to raise this question with him.

Is arbitration binding by definition? There's a clause in the contract that sounds reasonable to me (I've quoted it below)since it doesn't say that the arbitration is binding, so it seems that it just requires that we explore other alternatives prior to suing. Is this so?

'The parties hereto agree that should any dispute, controversy, or claim arise between them with respect to any matter relating to this Contract, which cannot be resolved by the mutual, good faith negotiations between the parties, such dispute shall first be submitted to mediation before a mediator mutually agreed upon by the parties. In the event a mediator is not mutually agreed upon or the mediation does not occur for any reason within 60 days of one party's written request to the other party to mediate or such mediation is unsuccessful in resolving any or all of the dispute, the parties agree to then submit such dispute to arbitration before an arbitrator licensed and approved by the AAA and such arbitration shall be conducted in accordance with the rules and regulations promulgated by the AAA. Neither party shall be entitled to bring or cause any dispute to be raised before any federal or state civil court or tribunal, each party hereby waiving its right to do so, prior to, in good faith, exhausting the modes of resolution set forth herein'.

Thanks,

Rachel
<HR></BLOCKQUOTE>

Tracey is correct and I will add that the language in the contract does not state binding arbitration so I ask why include an arbitration clause at all? If there is arbitration, the loser will have a remedy to litigate anyway.
 

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