Disagreements and disputes are a part of business. These types of situations occur on a regular basis, and companies need to learn how to handle them. Many times, contracts contain instructions for the way disputes are to be resolved. Alternative dispute resolution (ADR) is a method of resolving disagreements through mediation or arbitration. More and more contracts have clauses that require alternative dispute resolution in cases of disputes.


Mediation utilizes assistance from a professional to help resolve disputes. Mediation is often the first step in resolving a dispute. If there is an ADR clause in the contract, both parties are required to submit to mediation as a way to try to resolve the problem. A mediator is an objective third party who acts as a middleman between sparring parties. Each party must submit information to the mediator, who will share it with the other party. Typically, a meeting is necessary to discuss the situation together, along with the mediator. Then, the mediator will use his legal knowledge and experience to help guide parties to a resolution that is reasonable for both sides.


Another common form of ADR is arbitration. Arbitration is similar to mediation, except it is governed by law. The Federal Arbitration Act governs arbitration and in Arizona, there is also the Arizona Revised Uniform Arbitration Act, which also covers dispute arbitration. These laws are in place to ensure that when arbitration is used it is done in a fair manner for both parties. Arbitration uses some of the same legal methods that are part of standard court cases, although they are not technically legal processes. Arbitration may offer a way for parties to reach a fair settlement without taking the matter to court.

ADR Clauses

ADR clauses are becoming a standard part of every agreement, in all types of situations. The clauses may limit the ability for parties to file lawsuits or to take part in class action lawsuits. There is a growing concern that ADR could force parties into making decisions that are not in their best interests. One of the possible problems with forced arbitration is that it may require parties to utilize specific arbitration companies to resolve their cases. While arbitration is not a legal proceeding, generally accepted rules of arbitration are to be followed.

Disputes are common in business dealings. Whether you are creating a contract, or need to sign one, it is advisable to seek legal assistance. Your attorney knows the current laws that govern the situation and will ensure that you are protected and understand your options before you sign the contract.


This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice regarding Alternative Dispute Resolution, or any other litigation issues,  please feel free to contact us at 480.461.5300, log on to udallshumway.com,  or contact an attorney in your area. Udall Shumway PLC is located in Mesa, Arizona and is a full service law firm. We assist Individuals, families, businesses, schools and municipalities in Mesa and the Phoenix/East Valley.