Today I saw a mandatory arbitration clause in a breeding agreement. This came from outside Texas, but it goes without saying that business people who are also horse people think it is a great thing to throw these clauses into virtually every type of agreement. Since most horse business related contracts I can think of would probably not be interpreted as contracts of adhesion, this would be a tough clause to beat. So why have it??
It is becoming increasingly well known that arbitration can be as, and often is more expensive than traditional litigation. One reason is many arbitration forums do not favor summary judgment practice which can dispose of many meritless complaints before the parties spend too much money and get very far down the litigation trail. By in large, if both parties do not cooperate and fully follow arbitration rules - which usually entails voluntary disclosure of witnesses and evidence - the system does not work as intended!
I think people need to think twice before summarily including a mandatory arbitration or mediation provision in an agreement. There needs to be solid legal and business ($$$) reasons for including such a clause. Why would you want or disapprove of an arbitration clause in - say - a board, breeding or training agreement?? I'd love to hear more on this debate which has been near and dear to my heart as our State Bar has debated the ethics of lawyers including these clauses in engagement agreements!!
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