Arbitration clause is usually used clause in a contract that requires the parties to resolve their disputes through an arbitration process-Explain.

Arbitration clause is usually used clause in a contract that requires the parties to resolve their disputes through an arbitration process – Explain.

Law plays a vital role in our daily life. It basically shows a path how individual can stay & behave within a society. Law, as it is, the command of sovereign. It means Law has its source in sovereign authority; accompanied by sanctions; & the command to be a law must flow from a determinate person or group of persons with the threat of displeasure if it is not obeyed.[1] It permits its members to improve & extend with several type of safety concerning the prospect.[2] According to Arun Kumar Sen & Jitendra Kumar Mitra “A law of contract deals with agreements which can be enforced through court of law”.

Arbitration clause is usually used clause in a contract that requires the parties to resolve their disputes through an arbitration process. Although such a clause may or may not specify that arbitration occur within a specific jurisdiction, it always binds the parties to a type of resolution outside of the courts, and is therefore considered a kind of forum selection clause.[3]
Arbitration process contains several steps which I will discuss on my legal research paper.[4] Remedy specially means a legal remedy. It means with which a court of law, usually in the implement of civil law control, enforces a right, imposes a punishment, or makes some other court regulate to oblige its will.

Elements of contract

A law of contract might contain elements in writing. Contracts can be through orally. The remedy for violate of contract or bond can be “reimbursement” or compensation of cash or any kind of funds. In justice, the remedy can be precise act of the deal or an order. The parties may be ordinary or legal persons. It is a legally enforceable promise or undertaking that something will or will not occur. The sound assures can be used as a authorized synonym for contract.[5]

 Contracts are based on the following elements:-

a)      Offer

b)      Acceptance

c)       Intention to create legal relations

d)      & consideration.

Offer and acceptance:

The feature of a contract is that one party makes a deal & other party can accept that. It does not need to be uttered verbally or in text always. An implied or indirect contract is one in which several of the conditions are not spoken in words. An agreement which is implied in fact is one in which the situation entail that parties have reached a contract still although they have not done so expressly.[6] A contract which is implied in law is also called a quasi-contract, because it is not in fact a contract; somewhat, it is a means for the bench to remedy situations in which one party would be unfairly enriched were he or she not required to. [7]


Consideration is a bit of assessment agreed by a promissor to a promisee in trade for somewhat of worth or price given by a promisee to a promissor. It consists of a legal detriment and a negotiation. [8]

Oral contracts are ordinarily valid and therefore legally binding.[9] If a contract is in a written form, and someone signs it, then the signer is normally bound by its terms in spite of of whether he has really read it,[10] provided the article is contractual in nature.[11]

Contracts could be bilateral/ two-sided or unilateral/one-sided. A bilateral contract is an agreement in which each of the parties to the contract makes a promise or set of promises to the other party or parties.[12] In a unilateral contract, only one party to the contract makes a promise.[13]

In unilateral contracts, the requirement that acceptance be communicated to the offeror is waived unless otherwise stated in the offer.[14]


It is a contract among two or more parties to attempt to resolve a disagreement outside the court.[15] Basically there are no specific rules how arbitration is conducted, but it is naturally left to the conformity of the parties. Arbitration can be binding and non-binding by nature.[16]

 Some Key Benefits of Arbitration

  •  Arbitration serves as a medium to resolve disputes outside the court.
  •  It’s a swift, quick and simple, whereas law usually wastes a lot of time.
  • System of verification and process are frequently comfortable in arbitration.
  • Arbitration is less expensive than lawsuit.
  • Arbitrator fees will less than the attorneys’ fees.
  • To take a decision an arbitrator is not bound by the strict rules.
  •  Arbitrators always try to be realistic & sincere.
  • Arbitration can also bring conclusiveness.

(Sen A.K & Mitra J.K, 2008)

Some Drawbacks of Arbitration

  • There are no guarantees that arbitration will be done in a fair process.
  • Lacking the accurate appeal, there is always the danger of being subject to the prejudices of the negotiator.
  • The parties may be more liable to negotiation somewhat than follow an exclusive court case when there is a absence of an arbitration clause.

(Sen A.K & Mitra J.K, 2008)

The reasons behind arbitration clause being anticipated or projected

When you are going to notice or sign a contract, then you always look for an arbitration clause. If there is risk in the contract, you ought to ask a question why it makes sense to have such a section or article in there. If the possible reimbursements be more important than the potential drawbacks, it would construct intelligence to have the same opinion to negotiation. Or else, you might desire to advise with the intention of it be taken out.[17]

Individual privileges involved or not involved

In a rigorously big business arbitration can create a lot of intelligence. On the other hand, it could be a diverse condition wherever supplementary human rights are concerned that might potentially contain a overwhelming result on you personally in the event of a argument.[18]

We the general people are in the position to negotiate with respect to the arbitration clause or not

In theory, all contracts or agreements are negotiable. Though, the realistic capacity to perform so depends on the bargaining place of the parties.[19]

What does the arbitration clause cover or included?

Arbitration clauses have evolved to be somewhat stylish and complex. From time to time the thought of arbitration or settlement may create logic but the section itself can be too arrogant. The reverse can similarly be accurate. If the article does not create logic to you, you would like to appoint a legal representative to leave over it with you prior to your signing the agreement.[20]

What does the arbitration clause excluded?

A lot of negotiations clauses resolve keep out convinced things, such as ask for an order. In such cases, either party would be allowed to go to court to look for release from the performance that they would like stopped. These exclusions can create intelligence in situations, but you ought to still be positive to attempt to understand writing and understand them before approving to arbitration.[21]

What would we do in the event of an argument?

If we cannot distinguish what we would be requisite to perform at the moment, it is not going to create any additional intelligence downward the highway at what time an argument really arises.[22] Arbitration can be a good thing, but this is not always happen. We should keep in mind that we are potentially generous up the very significant rights to a trial earlier than a arbitrator and panel of judges so there must be good quality reasons for us to wish for to have the same opinion to judge.

Arbitration/ Negotiation Process

  • At first, argument arises.
  • Then ask for and compliance of difference of opinion to arbitration/negotiation.
  • Parties have the same opinion on an arbitrator or an arbitrator is chosen by an arbitral body or a court.
  • Then, Arbitrator accepts scheduled time.
  • After that, beginning meeting at arbitrator’s demand which can be a combined conference with everybody in attendance or may be conducted by phone discussion.
  • Preparations for the negotiation counting appoint of place and take trip preparations, typically completed by the parties with or without the help of an arbitral organization.
  • Authority issues instructions or the guidelines.
  • Introduction hearings and conditional awards likely in admiration of safety of expenses, possibility of negotiation contract.
  • Acquiescence of pleadings: claims / counterclaims and reply to counterclaim.
  • Find and grounding of decided papers.
  • Training of specialist intelligence.
  • Trial (all parties, legislative body, witnesses and experts and negotiator).
  • Award: judgment and expenses (The End).
  • If non fulfillment – action for enforcement or dare of or to honor.

These are the procedure by which an arbitration process took place. [23]

 Legal Remedy

There are mainly three vital remedies in American law. One is from the traditional law courts of England, and is seen in the form of a payment of money to the victim.[24]

The second class of remedy comes from the Chancellor of England, commonly called the Chancery Court. The injunction is a type of equitable remedy,[25] as is specific performance, in which someone who enters into a contract is forced to perform whatever promise has been reneged upon. Two additional equitable remedies are the equitable lien and the constructive trust.

The third broad group is declaratory remedies. Common examples are the declaratory judgment and the action to quiet title, and these remedies usually involve a court’s determination of how the law applies to particular facts without any command to the parties.[26] Courts give declaratory remedies about many different kinds of questions, including whether a person has a legal status, which the owner of a property is, whether a statute has a particular meaning, or what the rights are under a contract.[27]

While those are the three basic categories of remedies in American law, there are also a handful of others.


Finally we can say that law is become a very essential element to maintain a peace in our society. Without law our life would not be that much easy. Every concern people must obey the general law so that people can live happily. Law of contract is one of essential element of law which has little intention to create legal relationships. Contracts generally form by offer, acceptance & consideration which has different dilemma. Arbitration is a contract among two or more parties where there will be a resolve a disagreement outside the court. It’s mainly a negotiation process between 2 parties.

It generally conducted by an arbitrator or negotiation. Arbitration follows a specific procedure which has some bad & good side also (which I have written on page 4 & 5). I have also try to find out the reason behind arbitration law is projected, Individual privileges involved or not involved in arbitration process, negotiation with respect to the arbitration clause or not, why we involve ourselves in a argument, what are the internal & external process behind this etc. I will also discuss a legal remedy in an abroad perspective to make my legal research paper more effective.


1. English Law

(I) Books and Articles

Laycock D(1991), The Death of the Irreparable Injury Rule ,Oxford Univ. Press, 1991.

 Sen A.K & Mitra J.K. (2008), Commercial law including company law, The world press Pvt.   Ltd, 2008.

(II) Judicial Decisions

Curtis v. Chemical Cleaning and Dyeing Co [1951] 1 KB 805

L’Estrange v. Graucob [1934] 2 KB 394

 2. The Convention

(I) Books and Articles Bray, Samuel (2010). “Preventive Adjudication”. University of Chicago Law Review 77: 1275, 1281.


1. Arbitration clause, 2001, retrieved from,


 3. Law of contract, 2012, retrieved from,, online visited on  6th February, 2012.

4.Legal definition of promise, 2012, retrieved from,

5.Legal remedy, 2012, retrieved from,, online visited 18th February, 2012.

6. international principle, retrieved from,, online visited on 2nd February,2012

[1] See, the Information from our law 200 power point slides.

[2] According to Holland “ law is a rule of external human action enforced by the sovereign political authority”

[3] Furthermore, arbitration clauses are often combined with geographic forum selection clauses, and choice-of-law clauses, both of which are also fully enforceable. An arbitration clause may nevertheless be challenged and held invalid if it designates a biased party as the arbitrator.

[4] Arbitration process are file a claim; answer a claim; arbitrator selection; prehearing conferences; discovery; hearings; and decision & awards.

[5] See,

[6] For example, by going to a doctor for a checkup, a patient agrees that he will pay a fair price for the service. If one refuses to pay after being examined, the patient has breached a contract implied in fact.

[7] For example, a plumber accidentally installs a sprinkler system in the lawn of the wrong house.

[8] A legal detriment is a promise to do something or refrain from doing something that you have the legal right to do, or voluntarily doing or refraining from doing something, in the context of an agreement. A bargain is something the promisor (the party making promise or offer) wants, usually being one of the legal detriments. The legal detriment and bargain principles come together in consideration and create an exchange relationship, where both parties agree to exchange something that the other wishes to have.

[9] See, international principle

 [10] See, L’Estrange v. Graucob [1934] 2 KB 394

 [11] See, Curtis v. Chemical Cleaning and Dyeing Co [1951] 1 KB 805

[12] For example, Mr. karim promises to sell something & Mr. liaqat to buy it.

[13]  For example, promising to give your friend Tk 100, if he gives up smoking for a year. Here one party has assumed an obligation; & you are obliged to pay your friend if he gives up smoking, but he has not promised in turn to give up smoking.

[14] The offeree accepts by performing the condition, and the offeree’s performance is also treated as the price, or consideration, for the offeror’s promise. The offeror is master of the offer; it is he who decides whether the contract will be unilateral or bilateral. In unilateral contracts, the offer is made to the public at large. A bilateral contract is one in which there are duties on both sides, rights on both sides, and consideration on both sides. If an offeror makes an offer such as “If you promise to paint my house, I will give you $100,” this is a bilateral contract once the offeree accepts.

[15] The parties have the same opinion upon a third party as an arbitrator who will act as a judge and jury. After giving the parties the opportunity to present their side of the story and to present any relevant documents or other evidence, the arbitrator will act as King Solomon to decide who wins and who loses.

[16] A “binding” arbitration generally means that the winning party can take an arbitration award to a court of law and enforce it if the losing party does not comply with the terms of the decision. “Non-binding” arbitration refers to a situation where the parties agree to use arbitration as a forum to try to resolve their differences, but neither party is bound to comply with any decision by the arbitrator.


[18] For example, anything having to do with your job or with professional service that might be rendered to you.

[19] For example, if you are a consumer, you may not have much choice other than to “take it or leave it” in many contracts that you are being asked to sign. In other situations, such as buying a house or negotiating an employment contract, you may have a large say in the matter.


[21] for example, a clause provides for arbitration through the American Arbitration Association, you could call the nearest office and find out more of what would be involved.

[22] This payment is commonly referred to as damages. Compensatory damages compensate an injured victim or plaintiff, and punitive damages punish someone who because of fraud or intentional conduct, is deemed to deserve punishment. Punitive damages serve the function in civil law that fines do in criminal law.

[23] Douglas Laycock, The Death of the Irreparable Injury Rule (Oxford Univ. Press 1991).

[24]  Bray, Samuel (2010). “Preventive Adjudication”University of Chicago Law Review 77: 1275, 1281.