Rely on mediation clauses to foster communication

People tend to think of a mediation clause as something pertinent when a dispute arises between parties to a contract. But it is worth understanding what can trigger a mediation clause to come to life, as well as the purpose and process of a mediation.

If you want to save your business money in the long run then ensure the contract you enter with your trading partners contain robust and well-written dispute resolution terms that include triggering the process of mediation.

Mediation is a process where participants are supported by a mediator (a neutral third party) to:

• identify the issues

• develop options

• consider alternatives and

• make decisions about future actions and outcomes.

The mediator’s role (and challenge) is to facilitate the whole process of mediation, helping the parties to manoeuvre from seemingly intractable interest-based positions towards common issues and interests and in the majority of cases towards a post-mediation agreement.

Compared to many other forms of dispute resolution (such as conciliation, expert appraisal, arbitration or litigation/adjudication) a mediation is a cost-effective way to resolving problems between contracting parties. Typically running for about 4 hours (half a day) a mediation tends to resolve about 80% of commercial disputes and the parties leave with a full or partial settlement.

With these odds, it would be both prudent and economical to stipulate in your trading contracts for mediation to be a "condition precedent" to other formal proceedings in the event of a dispute.

Given that a mediation is a confidential process with greater success in helping parties to preserve their relationship, it certainly pays to ensure all your contracts contain a mediation clause.

Proof My Work Australia can help your business by reviewing to ensure your mediation clauses are written clearly and without errors. Simply visit proofmywork.com.au to find out more.