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Arbitration Laws

What is an Arbitration Agreement?

An arbitration agreement is an arbitration clause used in a contract to require the parties involved to resolve disputes through a specific process. This type of process binds all parties to specify a resolution outside of the court judicial system. Read below to find more answers from the Experts relating to an Arbitration Agreement.

If someone was an hourly employee can they be made to sign an Arbitration Agreement?

The employer has the right to set the terms of employment and can require the employee to sign an arbitration agreement. However, if the employee refuses to do so, the employer can terminate for that refusal. If the employee refuses because of a term that would be considered unconscionable, it is possible that the employee may be able to make an argument under the principle announced in “Poly-America” that they (employee) was wrongfully terminated, but in order to win, the employee would have to make new law in that specific regard. Furthermore, if the arbitration agreement involved does not contain any provision which might be considered unconscionable, then there really are no legal bases upon which to sue if they terminate for refusing to sign the agreement.

What can someone do if a company fails to arbitrate per the contract guidelines?

Generally, where a party fails to arbitrate as required in a contract the other party may file a civil suit. A judge may then attempt to compel the parties to arbitration as opposed to allowing the matter to proceed in court. Only where arbitration is not absolutely possible will a civil suit generally be allowed to proceed. It is likely that a party may seek to either force arbitration or seek a dismissal if a civil suit is filed where there is an arbitration agreement. A potential defense would be showing the failure of that party to comply with the requirement to arbitrate.

If someone inherited a business, does that mean they need to abide by the arbitration agreements that were in place already?

If someone inherited the business, they also inherited any agreements the business entered into prior to the new ownership. Even if the new owner changed from a DBA to an LLC, they would still be obligated to honor agreements previously entered into. In order not to be bound, the new owner would have to prove that the agreement has expired or that it is not binding in regard to the issue at hand.

How many times must a business owner take their business partner to arbitration before it can be taken to small claims court?

In most situations there is generally no need to go through filing for arbitration with another arbitrator. However, a suing business partner that has the case can force the other business partner to arbitrate, if the agreement is for mandatory arbitration, or if preferred can just sue for the damages. The partner would then have to raise the issue of arbitration and the suing partner can provide the evidence that the other partner refused.

When entering a contract many times arbitration clauses or arbitration agreements need to be in place, however knowing the arbitration laws and the arbitration process can become quite taxing on an individual. Often, the not knowing how to incorporate an arbitration clause can push people to ask questions to the Experts for answers.
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