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Arbitration Agreement

This Agreement is entered by and between Jonas Adam, individually or collectively as the "Signee" and Jane Smith, as the "Signer", together referred to as the "Parties".
The Contract is dated [the date both parties sign].

1. Agreement terms

The Parties agree that the following agreement is dependent on the terms presented as follow:

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Arbitration Agreement

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What is an Arbitration Agreement?

An Arbitration Agreement is a way to settle disputes outside of court. This legal document is a contract between the involved parties that enforces an agreement to settle any disputes that arise over the course of their business dealings outside of the court of law. Both parties agree not to bring a lawsuit against the other party during a dispute. Instead, they will take their dispute to a neutral party who will arbitrate a discussion between the two until a settlement can be agreed upon and the matter can be put to rest.


In an Arbitration Agreement, both parties will entrust a neutral arbitrator with the resolution of their disputes. (Source)


Where am I likely to see Arbitration Agreements in practice?

Most people have signed an Arbitration Agreement several times over the course of their life, whether or not they were aware of it. The fine print in most Terms and Conditions (TOS) statements for services that you subscribe to or websites you join (like Facebook) include a clause that you will settle disputes in arbitration. 

Likewise, almost every mobile app that you download to your phone will also have an Arbitration Agreement clause in their Terms and Conditions.  Other instances where these occur are employment contracts and consumer contracts. A lot of Arbitration Agreement clauses also appear in Warranty terms for larger ticket products.

Many business agreements, such as a subcontractor agreement, vendor agreement, or agency agreement, will include an arbitration agreement or clause to clarify what happens in the event of disputes in the course of those agreements.

Nearly every website and app you sign up for will have an Arbitration Agreement clause in their Terms of Service. (Source)

Business contracts will regularly enforce Arbitration Agreements. You can include these as a clause in nearly all of your business contracts, even if it is only a few lines stipulating that both parties agree to settle their disputes and disagreements outside of court. 

It is important that all of the involved parties understand what they are agreeing to when they sign Arbitration Agreements because these contracts are entered into before business relationships begin. Usually, these deal with businesses that are contracting to work together, a business and their consumers, and employees and their employers. Examples would include agreements between freelancers and the company they work for, adding new partners to an existing LLC, and construction companies and real estate firms embarking upon a joint venture for a new complex.

What should a sample Arbitration Agreement template include?


Arbitration Agreements can cover a wide range of issues, which is why having a sample Arbitration Agreement template to work from will really help you organize your case. These often stipulate that any and every issue covered under an original contract is also subject to arbitration instead of litigation. Some instances, on the other hand, only cover specific issues under arbitration agreements.

Scope of dispute for arbitration

A good sample Arbitration Agreement template should include the scope of the potential dispute. This will specify which disagreements will be settled in arbitration and which ones are outside of the bounds of the Arbitration Agreement (and therefore subject to litigation).  These are usually written very broadly, in order to cover all unforeseen events and disputes, but the phrasing needs to be specific enough to keep it enforceable in the courts. 

Process and parameters for arbitration

Arbitration Agreement templates will also need to cover where the arbitration will happen. This is especially important for mobile apps and websites, where clients are located in multiple countries with very different laws governing them. Even among the United States, each state has a different set of regulations. This makes important to determine where the arbitration takes place. Otherwise, you may end up having to meet a client overseas for arbitration in a country whose laws you don’t understand rather than in your place of business. 

You also need to specify the rules of arbitration. A good sample Arbitration Agreement template will specify the process of arbitration. They will dictate whether or not you will be required to conduct your arbitration through a legally recognized arbitration association or whether your institution can use its own rules and guidelines for arbitration. Most often, the business will want to conduct it internally, but the signor will want it to be a neutral arbitration organization. 

If you agree to conduct arbitration between the parties without an assigned arbitrator, then you need to be very specific when it comes to the rules that you specify. This section will need to outline any rules and stipulations for the entire arbitration process, including whether it follows the laws of one place despite being located in a different jurisdiction.

Your Arbitration Agreement also needs to determine how many arbitrators will be overseeing the process. There should always be at least 1 neutral party who does not represent the interest of one party over another, and who has not been bribed, coerced, or otherwise swayed into being less than neutral and fair in the negotiations. 

You are also able to specify how an arbitrator will be chosen for your dispute. You can set forth specific criteria that an arbitrator must meet. This is important in cases where you are dealing with specialized information and need an arbitrator with some understanding or knowledge of your field. If you use a single arbitrator, then all of the parties involved must agree upon who is used. There should be rules and provisions in place that provide for the choosing of an arbitrator should both parties fail to come to an agreement. 

Confidentiality and resolution

You also need to include a confidentiality clause if you want the details of your arbitration proceedings to remain confidential. Confidentiality is not possible with litigation because everything discussed gets entered into the public record of the court. Arbitration allows you to resolve your disputes confidentiality, without the details being made known to the public. Businesses will regularly include a confidentiality clause covering arbitration proceedings because they do not want to lose goodwill should major disputes arise that they settle. Another option is to sign a mutual NDA or similar clauses to protect the confidentiality of the engagement.

What is arbitration?

Arbitration is a situation that arises when parties do not wish to go through litigation and a Judge in a courtroom. Instead, arbitration usually happens in meeting rooms. Both parties are entitled to legal representation, so if you want to involve your attorney you are certainly allowed to do so. The arbitration process may also include testimony, witnesses, and offered proof. In fact, it can often proceed very like a courtroom situation but instead of a Judge, you will have an arbitrator hear both sides of the dispute. This process is far less formal than court, and usually far less expensive.  

Employee Warning Letters and Arbitration Agreements

Employee warning letters are common for staff that might be underperforming or even serious actions like that of harassment. The importance of these letters and having them signed by the employee is to protect the business legally. Writeups are quite common and a specific number of write-ups usually result in termination. There is a chance that an arbitration agreement will come into play to avoid going to court. The following are examples of why a person will receive an employee warning letter:

  • Unexcused absences from work or constantly coming in late. This needs to be documented and easily can be with the right employee hour tracking system. Most companies have policies in place that enforce these policies. For example, three occurrences of being late could result in a warning letter.
  • Any type of harassment needs to be confronted. The last thing a business wants is a lawsuit due to harassment and employees feeling like they are a part of a hostile working environment. 
  • Warning letters can also be for production or simply failing to meet the basic requirements of a position. A salesperson that hasn’t closed a deal in months is sure to get a letter. These letters do not always produce negative results as they can serve as a form of motivation to become a better employee. 

Below are tips for warning letters to protect the company legally:

  • Stick to the warning letter's reasons rather than enter into a verbal dispute. Consequences should be outlined so there is no confusion. 
  • The actions that resulted in the warning letter need to be mentioned in detail. 
  • Verbal warnings are the common first step with a written warning being far more serious. 
  • Make sure the employee signs the warning letter.

Arbitration might be necessary as there will be employees that will fight warning letters. This will reduce the likelihood of an employee blaming a manager for their suspension or termination. An unbiased 3rd party can be a huge assistance in the case of an employee not willing to accept a write-up. Keep in mind the contractors or freelancers can simply be terminated by breaching any part of an agreement so these letters will not be necessary. 

Trademark Assignment Agreements and Arbitration Agreements

Trademark assignment agreements are often disputed and have to be created to protect a company purchasing a trademarked phrase or symbol. A company that is being sold will enter into a trademark assignment agreement. These agreements can become an issue if there are multiple owners of a company that are not in agreement about the sale of the trademark. 

Below are a few reasons that disputes with trademark assignment agreements should be handled by arbitration:

  • Legal fees can add up quickly depending on the size of the deal being made. 
  • Arbitration is a fair way to settle the dispute with a 3rd party that neither gains or loses anything due to the decision that they make. 
  • At times, tensions run high so this 3rd party can help put things into perspective. Arbitration is commonly used during contentious divorces for this reason. 

Make sure that the trademark assignment agreement is thorough and abides by both state and federal laws!

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