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Infolawyer, Attorney
Category: Business Law
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From a Brokers point of view, In a standard Brokerage Agreement

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From a Broker's point of view, In a standard Brokerage Agreement between a Broker and a Food Manufacturer, is it better to include an Arbitration Clause ( American Arbitration Association) or to revert entirely to a court of law.
a. If the Broker is in CA and the Manufacturer is in Texas, does the Arbitration case have to take place in
Texas (home of manufacturer ) ?
It is better to submit to arbitration and have venue be in the county where broker is located.
Customer: replied 7 years ago.
If the Agreement contains an Arbitration clause ( i.e. "Any controversy or claim arising out of , or relating to, this Agreement, or the making, performance or interpretation thereof, shall be settled by arbitration in accordance with the rules of the american Arbitration Association, etc. ) , does this clause waive my rights to settle the matter in a court of law ? 60 Minutes did a story claiming the Arbitration process heavily made awards in favor of the manufacturer - to the tune of approximately 10 to 1 .

Should my Agreement avoid clauses like the above so that my right to a trial wouldn't be waived ? Should the Agreement be less specific and state instead, "This Agreement shall be governed by the laws of the State of California" which would open it up for ANY Legal Action, Arbitration or Proceeding" ?

I obviously have a fear of Arbitration and it is very likely the Manufacturer(s) will attempt to Terminate the Agreement prematurely so litigation is almost a certainty. What phrase can I use so that Arbitration isn't my only option in the likely event of premature Termination ? More importantly, would a Lawyer be less likely to accept my case on a Contingency basis if the Agreement contained the Arbitration Clause as above written ?
If there is such a clause then indeed you would turn to arbiration rather than the court. If you are concerned the arbitrator is not neutral then negotiate that clause out but often this clause is not negotiable.
Customer: replied 7 years ago.
THe venue of the Arbitration is in the locale of the manufacturer, namely Houston in this case. CAn I change it to my home city, San Francisco, legally ? Is it in my best interest to Arbitrate in San Francisco ?

The Arbitration Clause is Negotiable because I am "pioneering" a product line, there is no existing income stream, expenses aren't paid, so I am essentially a "free salesman " that receives no income if I don't sell the account. I take this arrangement because I have to as a newcomer to the brokerage business - but I bring 44 years of experience. Reality of my situation: If I sell a big account like Costco, the manufacturer will attempt to have my contract Terminated because it happens every day. My contract protects me for 24 months after Termination, but there will most assuredly be some sort of litigation. I am trying to give myself the best chance of Winning.

My Big Question: If the manufacturer rejects my Agreement changes - removal of Arbitration Clause as sole method of challenging Termination as well as changing venue to My Home City - is that a pretty good indicator that Arbitration serves their purpose far better than taking the case to court ?
The arbitration clause is standard. It tends to be fair. If you refuse, they may adjust it but likely will not close with you. I would not walk away over this clause.
Customer: replied 7 years ago.
I believe the ball is in my court and I have no trouble walking away from a bad deal, I have experience they need and I come absolutely Free. All things being equal, do the odds favor a Court of Law or Arbitration when it is one man going up against a major Food Manufacturer like Campbell Soup Co .?

Arbitration, Court or is it possible to do Both in a Brokerage Agreement ?
I prefer being before a court because it tends to be a more equal playing field with options for appeal.
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