Why is mediation good for contract disputes?

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Why Is Mediation Good For Contract Disputes

Business owners that have several contractors under their employment should have a good understanding of what mediation is. This negotiation process is used often by companies for employment legal problems that could cost additional money and time for both clients in litigation. However, if the case turns out to have more complications, then mediation may also end up as a waste of time before heading to court.

Even though mediation has become an increasingly popular negotiation option for companies in recent years, owners and managers need to be careful on when they want to use the process. Many small businesses claim that one of the best times for an employer to seek a mediator is when there is a contract dispute. Small business owners should understand what can make these cases easier to solve outside of the courtroom.

Individual problems

While many New Jersey employers try to keep contract details consistent among workers, not all of them are going to end up the same. A contract worker that threatens legal action has issues with their personal contract, not the contracts you’ve given to the other employees. Most of the times, their issues aren’t severe enough to take to the courtroom.

Additionally, mediation is private. This issue should be between you and the contractor alone. If the case becomes public, more workers could use it as an excuse to question their contracts and take you to court once more. If the session does bring up any issues with the current contracts, you can use that knowledge and apply it to current and forthcoming contractors to avoid further legal trouble.

Encouraging negotiation

When it comes to contractors, mediation and arbitration are two of the most common ways to handle contract issues. Unlike mediation, arbitration is a more formal process that focuses more on solving disputes rather than negotiating between the two parties and the arbitrator makes the decision instead of the parties. It’s slightly closer to the litigation process than mediation is while still operating outside of the court.

Some companies include forced arbitration on their contracts to give workers limited legal options if they have issues, which many have taken issue with over the years. By showing your contractor that you’re willing to negotiate instead of forcing someone else to decide for the both of you, you can build trust while still maintaining a positive reception amongst the other workers.

Business owners in New Jersey that are unsure what to do when a contractor brings up a problem should consult with a business law attorney to see what their best options are.


Michael Ritigstein is a Founding Partner of the firm concentrating his efforts in supporting the firm's litigation, corporate and estate matters. Mr. Ritigstein graduated from the University of Delaware in 1996 and Seton Hall University School of Law in 2000. In 2007 he received a Masters of Law in Taxation with a concentration in Estate Planning, from Temple University's Beasley School of Law.

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