Nature of the clause

This Precedent is a short-form clause for use in a business-to-business (B2B) commercial contract providing for mandatory mediation in the event of a dispute arising out of the agreement.

This Precedent clause provides that the parties will seek to settle the dispute. Unlike litigation and arbitration clauses, the purpose of this clause is for the parties to seek to resolve the matter with the assistance of a mediator, but without the need for formal contentious proceedings.

What is mediation and why have a mediation clause?

Mediation is a form of alternative dispute resolution (ADR) in which a third-party mediator follows a structured process to facilitate an agreed settlement between parties to a dispute. Mediation is a non-binding dispute resolution process, ie any agreement reached in mediation will only be binding on the parties if they enter into a settlement agreement.

Mediation allows the parties a high degree of control compared with litigation and provides a collaborative process for dispute resolution. Further advantages of mediation over arbitration or litigation, include:

1. •

   cost

2. •

   speed

3. •

   confidentiality

If