Boilerplate Contract Language By Design, Not By Accident
Do you skip the boring boilerplate in contracts before signing them? If so, you could be in for a big surprise later if there is a contract dispute. Before you sign any contract, you should focus on how disputes will get resolved. You are best served if there is language that provides for each of the following: (1) mediation prior to litigation; (2) reimbursement of attorneys' fees; and (3) litigation, not arbitration.
MEDIATION FIRST: Although the majority of lawsuits are settled, it is usually after the parties have incurred substantial attorneys' fees. Mediation should occur early and often until the dispute is resolved. Your next contract should therefore make mediation mandatory before either side may file a lawsuit. Anyone who sues first, loses his or her right to recover attorneys' fees.
ATTORNEYS' FEES: You want to discourage lawsuits by ensuring that the loser pays the winner's legal fees. The fee language should be broad enough to cover any dispute arising out of or related to the contract.
LITIGATION, NOT ARBITRATION: In arbitration, you give up the right to a jury trial and an appeal. This means that your stuck with a bad decision--even an incorrect one--unless you can prove the arbitrator was biased. Arbitration is also expensive and often inefficient.
Jeffrey Huron is the founder of Huron law group, a litigation firm that handles business, real estate and entertainment disputes.