Contract Clause Library
Dispute resolution clause
Sets the required process — negotiation, mediation, arbitration, or litigation — for resolving a disagreement before either party can sue.
Rather than leaving a disagreement to escalate straight to a lawsuit, this clause usually lays out a sequence: first a good-faith negotiation between named executives, then mediation, and only after that arbitration or litigation. It exists to make resolution cheaper and faster than court, and to set expectations upfront about how a serious disagreement actually gets handled.
Sample wording
Sample language (illustrative, not legal advice)
The parties will attempt in good faith to resolve any dispute through negotiation between senior representatives within 15 business days. If unresolved, either party may pursue binding arbitration under the rules of [arbitration body], with the arbitration seated in [city/state].
Red flags
- Mandatory arbitration paired with a waiver of the right to bring a class action or join other claimants
- An arbitration venue in a location far from either party's normal place of business, which raises the practical cost of pursuing a claim
- No initial good-faith negotiation step, jumping straight to a formal, costly process
How MarginFlow reads it
MarginFlow surfaces this clause's escalation sequence and required timelines mainly for reference — it's not something the extraction pipeline generates day-to-day alerts against, but it's the clause worth pulling up first the moment a relationship turns adversarial.
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