Whether or not you realize it, there is a high probability you are currently required to abide by an arbitration clause as an employee, a customer or a business. These clauses are a critical element of many contracts that can benefit companies, employers and businesses by lowering the potential court costs of settling a dispute. How does an arbitration clause work in Maryland?
What Is an Arbitration Clause?
These clauses are an agreement between parties to resolve disputes outside of a courtroom. Most clauses will call for a panel of arbitrators to help decide what is fair and appropriate. However, not every arbitration clause that you sign is legally enforceable. Maryland has a law, the Maryland Uniform Arbitration Act (MUAA) that governs the use of arbitration clauses in the state.
When Is an Arbitration Clause Enforceable?
The MUAA says that written arbitration agreements cannot be revoked if they are valid and enforceable. On what grounds can you challenge an arbitration agreement?
- Waiver: One party acted in a way that shows they didn’t want to utilize arbitration, like one party filing suit in court instead of starting the arbitration process
- Fraud: One party misrepresented or omitted a material fact in order to convince the other party to sign the arbitration agreement
- Duress: One party was coerced or threatened to sign the contract
- Unconscionability: One party did not have equal or substantial bargaining power before signing the provision
If you believe that the clause you signed may not be legally enforceable and wish to seek a legal remedy in court, contact Mobley and Brown, LLP to learn if you have a case.
Staying or Compelling Arbitration in Maryland
When a contract contains an arbitration agreement, some parties might not be able to agree on whether or not arbitration applies to a unique situation. Whenever a disagreement occurs, you can submit an application to stay or compel arbitration once the other party files suit. After this, the court will decide if the arbitration clause is relevant. Maryland courts will examine the validity of the clause, see how it applies, and come to a conclusion about whether it is enforceable. Mobley and Brown, LLP can help you during a contract dispute claim or before you sign a contract with an arbitration agreement included.
Contact Mobley & Brown, LLP for Your Business Law Needs
If you are preparing to sign a contract or looking to file suit when you are bound by an arbitration clause, contact Mobley and Brown, LLP today. Our experienced legal team will work with you to meet your needs. Call us now at (410) 385-0398.