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Tuesday, February 1,2011

Legal Insight

By Scott J. Topolski  

Q:We are having a new home built on the water. It is really our dream home.

The contractor whom we chose to build our home has presented us with a contract that contains a provision calling for arbitration in the event of any dispute relating to the contract or his work. I have a general idea what arbitration is, but are there advantages, as well as disadvantages, to arbitration?

A: Yes, there are. By and large, arbitration is much more streamlined, for lack of a better term, than proceedings in court. Often times, you can obtain a final hearing date more quickly. The rules of evidence are relaxed, and ordinarily all relevant documents are considered and reviewed by the arbitrator or arbitrators. Legal Insight

In addition, the decision of the arbitrator or arbitrators is considerably more difficult to appeal than a final judgment entered in state or federal court. The down side to arbitration is really frequently cost-driven, i.e., the costs of arbitration can commonly exceed the costs of a trial in court, whether before a judge or jury. Arbitrators, unlike judges or juries, have to be paid by the parties to the arbitration, with the fees of the arbitrator split equally amongst the parties. In addition, if the contract calls for one, rather than three arbitrators, then three arbitrators must be paid, further driving up the expense associated with the arbitration. For cases where the amount in question is, in the greater scheme of things, fairly low, arbitration may not be the best route.


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