The big advantage of an arbitration clause is that the outcome of a contract dispute is much more predictable and financially bounded in magnitude. The rule of law is working when people don't need to go to court to know how things will turn out. That is, the interpretation of the law shouldn't depend on the moods of the lawyer or the judge anymore than the interpretation of a piece of code should depend on the server it's running on.
If you cannot financially bound the cost of a contract dispute, you need to bake the cost of expensive lawsuits into the price of your product. And if you look at most class action judgments, a very large amount of the money (often the lion's share) goes to the lawyers rather than the aggrieved party.
With the recent Supreme Court rulings [1,2], it is now possible to include an incantation in your contracts that enables truly binding arbitration:
Arbitrator [has] exclusive authority to resolve any
dispute relating to the [Agreement’s] enforceability
including...any claim that all or any part of this
Agreement is void or voidable.
If you are writing a contract of any significance, you should include binding arbitration, you should include this arbitration language, and you should urge the other party to carefully read it up front to forestall any disputes down the line.
One last thought: you might say, ok, that's fine for the business, but what about the individual who doesn't have the time to read 20-page constantly changing terms of service (TOS) agreements? One answer could be a simple contract review site/search engine. For most large companies, the TOS/contracts are the same for all customers. If you actually care about what you're signing before you're signing it (and in some cases, like large enterprise deals, you really do), it could be interesting to put a TOS review site together which drew traffic from reviews of high-volume free TOS's (like Facebook's or Google's) while monetizing by reviewing confidential or lower-volume TOS's (like Yammer or Salesforce).
If you pulled a few thousand TOS from across the web, you really could see whether a provision was truly standard, how many other sites have a similar provision, whether that provision has ever been litigated, and similar metrics. This is one vertical among many in the legal field that is ripe for attack by computer science.
> The big advantage of an arbitration clause is that the outcome of a contract dispute is much more predictable
That is indeed a big advantage, but not for you. If you are an individual and the counterparty is a large corporation, the predictable outcome is that you will (almost certainly) lose, notwithstanding the merits of the case.
The big advantage of an arbitration clause is that the outcome of a contract dispute is much more predictable and financially bounded in magnitude. The rule of law is working when people don't need to go to court to know how things will turn out. That is, the interpretation of the law shouldn't depend on the moods of the lawyer or the judge anymore than the interpretation of a piece of code should depend on the server it's running on.
If you cannot financially bound the cost of a contract dispute, you need to bake the cost of expensive lawsuits into the price of your product. And if you look at most class action judgments, a very large amount of the money (often the lion's share) goes to the lawyers rather than the aggrieved party.
With the recent Supreme Court rulings [1,2], it is now possible to include an incantation in your contracts that enables truly binding arbitration:
If you are writing a contract of any significance, you should include binding arbitration, you should include this arbitration language, and you should urge the other party to carefully read it up front to forestall any disputes down the line.One last thought: you might say, ok, that's fine for the business, but what about the individual who doesn't have the time to read 20-page constantly changing terms of service (TOS) agreements? One answer could be a simple contract review site/search engine. For most large companies, the TOS/contracts are the same for all customers. If you actually care about what you're signing before you're signing it (and in some cases, like large enterprise deals, you really do), it could be interesting to put a TOS review site together which drew traffic from reviews of high-volume free TOS's (like Facebook's or Google's) while monetizing by reviewing confidential or lower-volume TOS's (like Yammer or Salesforce).
If you pulled a few thousand TOS from across the web, you really could see whether a provision was truly standard, how many other sites have a similar provision, whether that provision has ever been litigated, and similar metrics. This is one vertical among many in the legal field that is ripe for attack by computer science.
[1] http://www.scotusblog.com/case-files/cases/rent-a-center-v-j...
[2] http://www.scotusblog.com/case-files/cases/att-mobility-v-co...