Having a mediation clause in your standard remodeling contract protects you and your client. Remodeling can be stressful, noisy, and dirty; materials don’t always come in on time; stuff breaks; and no one knows for sure what is behind those walls. The opportunity for a dispute to arise is far greater than in a simple sale of a product. Your clients will appreciate that you have a fair and cost-efficient manner to resolve disputes built into your contract.
During mediation, parties submit their dispute to a third party trained to facilitate a resolution. Unlike litigation or arbitration where a third party decides which party should “win” the dispute, the mediator helps the parties work together to come to an agreement on a fair resolution. Mediation is private and confidential, time- and cost-efficient, and is an informal proceeding, even if lawyers are involved.
A basic mediation clause states that before any formal lawsuit is filed, the parties agree that the dispute will be submitted to a formal mediation proceeding.
You may also want to attach a formal arbitration clause to the mediation clause, which says the parties agree that issues not resolved by mediation will be submitted to a binding arbitration instead of a formal court case.
Ask your lawyer which type of dispute resolution clause works best for your business. At a minimum, however, mediation should be the first step, as most disputes will resolve at mediation. Including a mediation clause in your customer contract is not only good business, its good customer service.
—Attorney Richard Feeley is president of Feeley Mediation & Business Law LLC an Atlanta–based specialty law firm providing legal solutions for home builders and remodelers.