Arbitration Clause for Small Business Disputes

Legal Term

Arbitration Clause for Small Business Customer Disputes

Legal Definition

A contractual provision requiring disputes between a small business and its customers to be resolved through private, out-of-court arbitration before a neutral third party, typically waiving the right to a jury trial and often class action lawsuits, as governed by the Federal Arbitration Act and state contract law.

In Plain English

It's a rule in a contract that says if you have a problem with a business, you can't sue them in regular court. Instead, you must go to a private meeting with a neutral decision-maker (an arbitrator).

Example in a Contract

Any dispute arising from or relating to this service agreement shall be resolved by binding arbitration administered by the American Arbitration Association under its Consumer Arbitration Rules. The arbitrator's award shall be final and judgment may be entered in any court of competent jurisdiction. THE PARTIES HEREBY WAIVE THEIR RIGHT TO A JURY TRIAL AND TO PARTICIPATE IN ANY CLASS ACTION PROCEEDING.

This content is for informational purposes only and does not constitute legal advice. Always consult a licensed attorney for legal matters.