PHAM & CLOVES, PLLC

Arbitration Clauses

An arbitration clause is a section in a contract that governs how the parties to the contract will resolve disputes that arise as a result of performance, or lack thereof, of the contract. Arbitration clauses oftentimes are very broad in scope (cover any possible issue related to the contract), but can be narrowly tailored to fit any situation. The main effect of an arbitration clause is the restriction on court access for the parties as a redress for conflict resolution. Arbitration clauses limit the parties’ right to a jury, to extensive discovery and to appeal in very specific instances. Arbitrations were originally designed to be a faster and less expensive vehicle for the parties seeking a remedy. However, there is no guarantee that arbitration will be any less expensive than litigation.

An arbitration clause, these days, will appear in almost any kind of contract. Employment contracts will generally have these types of clauses as will construction contracts and most other service contracts. If you may be subject to an arbitration clause, it would be prudent to seek legal advice from a North Houston Arbitration Attorney at Veritas Legal Group prior to signing the contract. Arbitration contracts can be negotiable, but can also be a take-it-or-leave-it part of the contract.

The contractual right to arbitrate based upon an arbitration provision in a contract can be waived through the actions of the party seeking to enforce the provision, but such waiver must be shown to be intentional like substantially invoking the judicial process. Substantially invoking the judicial process has been defined as actively trying, but failing, to achieve a satisfactory result in litigation before turning to arbitration. Additionally, in order for an arbitration clause to be enforceable, the parties to the contract must have agreed to arbitrate and the agreement to arbitrate must encompass the claims that are in issue. A valid agreement to arbitrate must exist to enforce the arbitration provision. Since the issue of arbitration is contractual, a party resisting arbitration can plead any contractual defense.   

If a party shows that it has a valid arbitration agreement that encompasses the claims in issue and there are no defenses to the agreement, the clause will very likely be enforced. If you have a business, you undoubtedly are subject to contract so some kind. If these contracts have arbitration clauses and you are not quite sure of the legal importance of the clause, contact a Spring Arbitration Clause Attorney or a Houston Business Litigation and Dispute Lawyer at Veritas Legal Group at 832-484-9015 or fill out the online contact form to schedule a consultation