How can you create a fair dispute resolution clause for commercial leasing?

1 Types of dispute resolution

When it comes to dispute resolution, you have a range of options to choose from, depending on your preferences, budget, and the nature of the dispute. Negotiation is the simplest and cheapest way, where both parties try to reach a mutually acceptable solution without involving any third parties. Mediation is a voluntary and confidential process that involves a neutral mediator to help facilitate dialogue and suggest potential options. Arbitration is binding and enforceable, where an arbitrator or panel of arbitrators make a decision based on the evidence and arguments presented. The most formal and expensive way is litigation - taking the matter to court with a judge or jury deciding the outcome. This process involves strict rules of evidence, procedure, and appeal and can be time-consuming while also exposing you to public scrutiny.

2 Advantages and disadvantages

When choosing a dispute resolution for your lease agreement, you should consider the cost, time, control, flexibility, and privacy of each type. Negotiation and mediation are usually the least costly and fastest options, as they don't require any fees or lawyers. Additionally, they give you more control over the process and outcome, as well as more flexibility to explore different options and solutions. Furthermore, these methods are private and confidential, with no public record. On the other hand, arbitration and litigation are more costly and time-consuming. They also give you less control over the process and outcome, while limiting you to legal arguments and remedies. Lastly, these methods are subject to disclosure and can be accessed by anyone.

3 Best practices

Creating a fair dispute resolution clause for commercial leasing requires following some best practices. The clause should be clear and specific, balanced and reasonable, flexible and adaptable, and consistent and compatible with the rest of the lease agreement. It should clearly state what type of dispute resolution method you prefer, how it will be initiated, conducted, and concluded, as well as the consequences of failing to comply or abide by the outcome. Moreover, it should not favor one party over the other, or impose unreasonable or unfair terms or conditions. Furthermore, it should allow for some flexibility and adaptability in case the circumstances or the nature of the dispute change. By following these guidelines, you can create a clause that can help protect your rights and interests while resolving any potential conflicts in an efficient and effective way.

4 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?