What Does “Mediation” Mean in a Contract?
A voluntary dispute resolution process where a neutral mediator helps parties reach a mutually acceptable agreement.
Detailed Explanation
Mediation is non-binding—the mediator facilitates negotiation but doesn't impose a decision. Parties must agree to any resolution. This differs from arbitration where the arbitrator decides.
Mediation is often required before arbitration or litigation as a cost-saving step. Success depends on both parties' willingness to compromise. If mediation fails, the dispute proceeds to the next step.
Example in a Contract
“Before initiating arbitration, the parties shall attempt to resolve disputes through mediation administered by [Provider]. If mediation does not result in resolution within 30 days, either party may proceed to arbitration.”
Why It Matters
Mediation clauses require an attempt to settle before expensive litigation or arbitration. They can save significant costs if resolution is possible. However, they also delay resolution if the other party isn't negotiating in good faith.
Related Terms
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