Arbitration provisions in contracts have become increasingly popular in California. There are many benefits to these provisions and also some aspects of them that might not be as beneficial. Regardless of why you agree to an arbitration provision, there are a few simple things that must be done for the Arbitration provision to be valid and enforced in California.
1. Write it down. An Arbitration provision must be in writing and included within the contract. It should also be in bold print, and in 12 point font or greater.
2. Have the Arbitration provision initialed by each party. Each party agreeing to the Arbitration provision should specifically place their initials next to the Arbitration provision to show that they actually read the arbitration clause.
3. Make sure the Arbitration provision states that the parties may lose their rights to a jury trial in arbitration. Most people do not realize it, but in arbitration, your case will be decided by one person, and not a jury of your peers.
4. Give both parties several days to look over the contract before they sign. This is an especially important provision in employment contracts. California courts have ruled that an employment contract will be seen as a “contract of adhesion” or a “take it or leave it contract” if it is thrust upon one party without a chance for review and negotiation. If your contract is seen as a contract of adhesion, the Arbitration Clause will be void. Therefore, make sure each party reviews the contract for several days before it is signed. A safe way to accomplish this is to send an email to the contracting parties, with the contract attached. In the body of the email, state that all provisions are negotiable, and that you will discuss the contract together in two or three days. Make sure the other party responds to your email.
5. Sign the contract.
The San Francisco Bay Area law office of Jones & Devoy LLP helps clients throughout Northern California negotiable and settle arbitration disputes and create valid enforceable contracts and arbitration provisions. Contact us today for a free consultation.