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Simple English definitions for legal terms
arbitration clause
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A quick definition of arbitration clause:
An arbitration clause is a part of a contract that says if there is a disagreement between the people or companies involved, they will use a special process called arbitration to solve the problem instead of going to court. This helps them avoid a long and expensive legal battle.
A more thorough explanation:
An arbitration clause is a part of a contract that requires any disputes between the parties to be resolved through arbitration instead of going to court. This clause is used to avoid litigation and settle disputes in a more efficient and cost-effective manner.
John and Jane enter into a contract for the sale of a car. The contract includes an arbitration clause that states any disputes arising from the contract will be resolved through arbitration. If John and Jane have a disagreement about the sale of the car, they will have to go through arbitration instead of taking the matter to court.
Another example could be a contract between an employer and an employee that includes an arbitration clause for any disputes related to the employment contract.
These examples illustrate how an arbitration clause can be used to avoid costly and time-consuming litigation by requiring the parties to resolve their disputes through arbitration.