Legal Definitions - extrajudicial remedy

An extrajudicial remedy refers to a solution or a course of action taken to resolve a dispute, enforce a right, or compensate for a loss without involving a court of law or a judge. These remedies are typically based on private agreements, contractual terms, or specific legal provisions that allow parties to take direct action outside the formal judicial system.

• Example 1: Vehicle Repossession

  Imagine a person purchases a car with a loan, and the loan agreement specifies that if they fail to make payments, the lender has the right to repossess the vehicle. If the borrower misses several payments, the lender may send a tow truck to reclaim the car.

  This action is an extrajudicial remedy because the lender is enforcing its right to reclaim collateral for a defaulted loan directly, without filing a lawsuit or obtaining a court order. The right to repossess is established by the loan contract and specific laws governing secured transactions, allowing the lender to act outside the judicial process.

• Example 2: Contractual Right of Termination

  Consider a business that hires a marketing agency for a campaign. Their contract includes a clause stating that if the agency fails to meet specific performance metrics by a certain date, the business can immediately terminate the contract and withhold the final payment.

  If the agency fails to meet the agreed-upon metrics, the business exercises its contractual right to terminate the agreement and refuses to pay for the incomplete work. This is an extrajudicial remedy because the business is resolving a breach of contract and enforcing its rights directly according to the terms of their private agreement, without needing to sue the agency in court.

• Example 3: Private Arbitration Agreement

  Two companies enter into a partnership agreement that includes a mandatory arbitration clause. This clause stipulates that any disputes arising from their partnership must be resolved through private arbitration rather than through traditional litigation in court.

  When a disagreement arises between the companies, instead of filing a lawsuit, they submit their dispute to an independent arbitrator, who hears both sides and makes a binding decision. This is an extrajudicial remedy because the parties are resolving their conflict and seeking a resolution through an agreed-upon private process, entirely outside the formal court system.