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What is a pre-mediation contract?

On Behalf of | Aug 5, 2022 | Construction Litigation |

There are multiple reasons why savvy construction contractors and subcontractors want to avoid litigation. Litigation is often an expensive and time-consuming process that takes focus away from other objectives. It can also destroy valuable business relationships.

For this reason, mediation is a popular means of alternative dispute resolution in the construction industry. According to FindLaw, prior to engaging in mediation with another party, you should create a pre-mediation contract.

What does a pre-mediation contract do?

Pre-mediation contracts are usually simple in nature. Essentially, this contract can help you and the other party clearly understand how the mediation process unfolds. A well-crafted pre-mediation contract can help prevent mediation from moving into litigation.

What should be inside of a pre-mediation contract?

The contents of a pre-mediation contract will differ depending on the nature of the parties involved and the dispute. However, at minimum, a pre-mediation contract should ensure that the proceedings are non-binding. This means that if both parties cannot come to an agreement during the mediation process that there is the possibility of moving to litigation.

Pre-mediation contracts should also specify who will pay the mediator and who the mediator will be. In most cases, the parties split the cost of the mediator. You can also specify a time limit for how long the mediation will last. In the event that the mediation is unsuccessful and comes to an impasse, a pre-mediation contract can also stipulate next steps in some instances.

Conflict is often unavoidable in the construction industry. However, the use of well-defined pre-mediation contracts can help ensure that you can solve conflicts amicably through mediation rather than litigation.