It is increasingly common to find "mandatory mediation" clauses in contracts. This is true whether the contract is a property purchase agreement, a construction contract or any other business or personal agreement which was put in writing and in which somebody thought to include mediation as a first step in any dispute arising out of the written agreement.
When such a provision is included in a contract, the parties are required to meet together with a mediator in an attempt to work out a solution before anybody heads to court to file a breach of contract or other lawsuit. This helps everyone involved save the time and money generally required to hire an attorney and file a lawsuit or hire an attorney and defend a lawsuit.
Such a mandatory mediation provision essentially forces the parties to consider ways to resolve their disagreements in a structured and private forum well before it becomes a public dispute playing out in the courts and possibly the press.
This "mandatory mediation" of such disputes is also the first time the parties may each be required to spend money out of pocket towards the dispute. This first pay out is usually slightly painful, but it is minimal compared with the pay outs required of everyone in the event the parties are unable to work out a solution and must proceed to court litigation.
In my next post, I will explore the pros and cons of mediated cases in which one or more parties have decided to not hire attorneys. This may be a cost-saving measure for parties, but is it the best course of action? More on this in my next post...
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