Adding a mediation clause to your contracts is a strategic move that can save time, money, and relationships.
At the beginning of a new partnership or when hiring new employees, no one wants to think about “what if it does not work out.” However, our experience shows that it is at that exact moment, that you need to define “what if it does not work out”. This way, when a situation occurs that is out of everyone’s expertise to solve, the mediation clause can be used as a reference on how to proceed amicably.
In this blog post, we provide examples illustrating how a mediation clause can serve you in the future. We also offer a sample clause that can be adapted to your specific needs.
Preservation of Relationships
- Collaborative Approach: Mediation encourages a collaborative rather than adversarial approach, which helps maintain and even strengthen business relationships. Parties work together to find mutually beneficial solutions.
- Personalized Solutions: The mediation process is flexible and can be tailored to the specific needs and interests of the parties involved, often leading to more satisfactory and sustainable outcomes.
Confidentiality and Privacy
- Protected Information: Mediation is a confidential process, ensuring that sensitive business information remains private. This contrasts sharply with the public nature of court cases, where details can become part of the public record.
Effective Dispute Resolution
- Minimized Business Disruption: Mediation can start very quickly, allowing the conflict to be addressed before it disrupts business further. Mediation typically takes less time than court proceedings, allowing businesses to quickly return to normal operations without prolonged disruption.
Dispute Resolution Clause
1. Mediation Requirement
In the event of any dispute, controversy, or claim arising out of or relating to this Agreement, including any breach, termination, or validity thereof, the parties agree to first attempt to resolve the matter through mediation before resorting to litigation or any other dispute resolution procedure.
2. Initiation of Mediation
Either party may initiate mediation by providing written notice to the other party of the dispute and their intent to mediate. Within fifteen (15) days of such notice, the parties shall jointly select a mutually acceptable mediator, such as those available through Herberholz Mediation Services.
3. Mediation Procedure
The mediation shall be conducted in accordance with the rules and procedures established by the selected mediator, unless otherwise agreed by the parties. The mediation shall take place at a mutually agreed location (or online) and shall commence within thirty (30) days of the mediator’s selection.
4. Costs and Fees
The mediation shall be conducted in accordance with the rules and procedures established by the selected mediator, unless otherwise agreed by the parties. The mediation shall take place at a mutually agreed location (or online) and shall commence within thirty (30) days of the mediator’s selection.
5. Confidentiality
All communications, discussions, and materials exchanged during the mediation process shall be confidential and inadmissible in any subsequent legal proceedings, except as required by law.
6. Binding Nature
The parties agree to participate in the mediation process in good faith with the intention of resolving the dispute. Any settlement reached as a result of mediation shall be documented in writing and signed by the parties. Such a settlement shall be binding and enforceable as a contractual agreement.
7. Litigation
If the dispute is not resolved through mediation within sixty (60) days of the mediator’s appointment, either party may pursue any available legal or equitable remedies.
In conclusion, organisations that include mediation clauses in their contracts demonstrate to their partners and employees that they care about maintaining positive relationships and prefer amicable resolutions to disputes.
We welcome any questions about this clause, its implementation, and its consequences. Feel free to reach out to us at Herberholz Mediation Solutions for more information and assistance.