The contract clause to be considered in this case is dispute resolution clause. Dispute resolution clause is a section in a contract or agreement that sets out the techniques for solving disputes between two or more contractual parties. The agreement scope is resolute in clause drafting. The dispute resolution clause requires to be unambiguous and clearly drafted. This highly determined if the clause can be used to resolve any contractual conflict or can just be dismissed as irrelevant due to a high level of ambiguity. A good dispute resolution (DR) clause constitutes of contingent in what the parties anticipate to attain from the inclusion of clause of such kind in their agreement. The DR clause need to forestall future issues and efficiently have provisions which resolves the issue satisfactorily in a way that is advantageous to both parties. Therefore, a suitable DR clause will be founded on a different variables which include the parties’ relationship and interest, the contract nature and subject matter and the respective bargaining power of the parties. In this regard, DR clause need to be deliberately drafted, instead of routinely, with every contract customization in order to attain the most desired outcome of the parties. Thus, there is no any single DR clause which can handle all agreements (Bihancov, 2014).
Legal Issues regarding Dispute Resolution Clause
According to Bihancov (2014), a suitable DR clause must be enforceable, be a condition model to litigation, be certain and clear as to the process and mechanism to be followed, be able to foresee the issues that might arise as far as possible and be able to preserve the association of disputing parties. Different to arbitration, there is basically no basis of legislative for an agreement enforcement to mediate. Thus, a good DR clause which integrate processes of dispute resolution for instance mediation must be created to address the enforceability needs, else the insertion of a clause of that nature is objectively purposeless. The DR Clause enforceability guarantees that parties try to perform their duties under the DR clause prior to considering litigation. The probable outcomes from obligations of breaching under the DR clause gives incentives to try to resolve a conflict without litigation.
An enforceable DR Clause should not expel the court’s jurisdiction, but instead it should state clearly that the process of dispute resolution is a situation practice to litigation. This clause must be clear on the procedure to be followed to resolve a dispute and the strategies to be used to choose a third party to assisting in resolution process. The clause must also provide a clear steps to be taken in case there will be no a compromising position attained with the intervention of the third party. The clause must foresee all possible problems that they may occur which may result into unresolvable disputes in the future. Problems definition and DR clause drafting must be done to suit the expected problems which will highly be determined by the interest of individuals needing protection and representation as well as the agreement. This is a very extensive scope that expects any probable problem that include contract breach, subject or validity matter associating to the agreement, and contract termination. Finally, an enforceable clause need to enhance the preservation and maintenance of the contractual parties’ relationship. Designing the dispute progress via a suitable DR clause might assist the parties in preserving their association and finding it to be more valuable as compared to the matter of the dispute (Bihancov, 2014).
Application of Dispute Resolution Clause in Real property Management
In real property management, disputes are common between the landlord and the tenants based on different aspects. These aspects include the use of the property, the rent payment, property maintenance, property lighting, and the shared utilities among other disputes. Basically, the tenant and the landlord may develop a contract on how to resolve their issues. The contract may be drafted by the landlord and a tenant may be required to sign upon agreement. In this case, signing of the contract implies that the tenant agree to be guided by the structured contract. In case of unresolvable dispute, both the tenant and the landlord will employed the dispute resolution clause to identify the third party to assist in resolving the issue. The third party will then review the contract that binds the two and listen to the case. In this case, the third party will try to assist them resolve the case. In this case, the two parties will be anticipated to compromise to reach an agreement. The DR clause will be used to ensure that the dispute is settled without destroying the association between them, since they both need each other. In case the problem is not resolved even with the aid of a third party. In case the problem even with the aid of the party, the dispute resolution clause, the clause should guide on how they two can settle their issue in a litigation. However, this will try to be avoided by ensuring that the clause addresses all problems that can occur between a landlord and the tenant or a buyer and a seller in case the property is being sold (Scott, 2014).
Bihancov, A. (2014). What is an example of a good dispute resolution clause and why? Australian Center for Justice Innovation Civil Justice Research Online, 2, 1-19
Scott, M. (2014, 14 Jan). Dispute resolution in real estate contracts. Retrieved from < http://www.nabarro.com/insight/briefings/2014/january/dispute-resolution-in-real-estate-contracts/>
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