This document is an optional clause which can be inserted into a business sale agreement.

Sometimes, the parties to a business sale agreement decide that any dispute between them will be resolved by arbitration instead of going to court.

Arbitration procedures are very similar to court procedures, but more flexible. The arbitrator makes the final determination in the matter, and there are very few grounds under which the parties can appeal the decision of the arbitrator.

Using arbitration as a method to resolve disputes is useful in international transactions and commonly found in sale of business agreements where one or more of the parties are not Australian. Where parties to resolve disputes by arbitration, it is necessary to include a dispute resolution clause in the agreement setting out the reference to arbitration.

Using this precedent

This precedent clause can be used in a business sale agreement. It can also be inserted into the “General” provisions of the separate precedents “Business sale agreement – sale of assets (short form)” and “Business sale agreement – sale of shares (short form)”.

When inserting this optional clause into an agreement, care must be taken to ensure that the agreement remains consistent. Cross-references, definitions and schedules should all be checked.

This document has been authored for LexisNexis by Elise Margow, Principal, Legally Speaking.

This document is prepared with the assistance of Specialist Editor Murray Landis, Partner, K&L Gates.