When facing a contract dispute, it is important to have as many tools on hand to take care of the matter as possible. After all, what works for one dispute may not work for all of them. It is important to assess each situation on an individual level and make a choice from there.
But first, you need to know what options you have. This is where understanding alternative methods of solving disputes comes in.
Litigation vs. mediation
FINRA looks at possible alternatives to litigation, including arbitration and mediation. Litigation is often the go-to method people consider when they talk about handling disputes between parties. While this may work for some, it is a time consuming and expensive choice. Sometimes, you just do not need the full power of litigation.
For example, if the dispute is relatively minor and all parties are on decent terms, you can consider mediation. With this option, a neutral third party stands in and listens to everyone present their arguments and evidence. They cannot make a legally binding decision on what you should do to solve your dispute. They can, however, offer suggestions and opinions on what they think will work best. They also step in when arguments get out of hand and ensure everyone has a chance to say their part.
Mediation vs. arbitration
But sometimes, you need a little more structure than that. This is where arbitration shines. Arbitration acts as a middle point between mediation and litigation. An arbitrator has more power than a mediator, but less power than a judge. They listen to all sides of the story and hand down a legally binding decision. But you do not need a court date, so you can skip the time-consuming process of having a trial and the legal fees that come with it.