It could be argued that with an informal agreement, drafted by the parties themselves in ordinary English (often through an exchange of emails), there is no need for a formal contract.
You start working together and things are either going well or they aren’t. If all is good, then in practice, any agreement gets tweaked, discussed, or even re-negotiated along the way – a healthy alliance is created and changes dealt with as a normal part of the journey.
When there are differences, then reverting to almost any type of agreement, whether formal or informal, will only reveal who might be right and who might be wrong – depending on whose opinion it is. That simply generates ‘me-vs-you’ arguments, and rights claimed by both.
OUTCOMES BASED ON RIGHTS ARE UNSUSTAINABLE.
As long as there is common ground – which is often hidden – then resolution through dialogue is possible. Resolution may even mean the break-up of the relationship, but that too doesn’t require win/ lose arguing. Agreements to disagree don’t have to lead to animosity or a loss of relationship.
Alternative Dispute Resolution Agreements is a “time-out” mechanism.
It precludes litigation by either party and therefore saves time, costs, and frustration. Notably, over 92% of litigated cases are settled before trial – after disproportionate costs have been endured and unpredictability consistent. Negotiation should not happen at the end. Negotiating at the beginning makes so much more sense. An ADR Agreement requires just that: Negotiation, and if that fails, Mediation, which has a success rate of over 75%.
If Mediation fails, then final and binding Arbitration is required. That’s the point at which opportunities for the disputants to collaborate and generate creative ideas that work for them are forfeited. Someone else will impose the outcome which may not work for either (lose/ lose).
Arbitration’s promise is one that vastly improves on litigation. However, it can become as much of a problem as litigation is. This depends on the ADR Agreement’s ‘rules of engagement’. Most of the very many Arbitration agreements I have reviewed are poorly drafted; often by lawyers that are not specialised in the field of ADR.
A poorly drafted Arbitration agreement can lead to all sorts of challenges – many of which require a court’s interpretation of its content. That causes unnecessary delays and costs normally associated with litigation.
A ridiculous yet real example is one where an agreement names the Arbitration Foundation of South Africa as administrator/ referee. The correct name is The Arbitration Foundation of Southern Africa. That provides an obstructive party an opportunity to frustrate, delay, and drive up costs. When Arbitration turns in to a fiasco with shenanigans typical of litigation, it is almost always because of poorly drafted agreements.
There are many “general” ADR Agreement templates available on the internet. To get what you and your partner want, it is unwise to imagine that a ‘one-size-fits-all’ will be useful when it needs to be. This part of an ADR agreement is conceivably the most important in order to get resolution quicker, cheaper, and in a more predictable way than litigation.
I work with people who are (mutually) concerned about exposure to litigation if a dispute arises. The value that I add is in ensuring that there is a good understanding of the reasons for Negotiation and subsequent Mediation. This goes further to explore the expectations and concerns of each side. Common ground is identified and consensus reached that can easily be expressed in ordinary English by the players.
Everyone must be able to provide the same answer to the question: “what happens in the event of a serious disagreement?”
When that is crystal clear, it is informally documented and goes to a suitably qualified lawyer to review and clarify, question or propose, as needed. Then the final tweaks are incorporated in to a ‘heads-of-agreement’ – also in lay terms and fully understandable by the parties.
Only then does the lawyer draft the agreement – ensuring that it becomes robust and implementable as intended by the participants.
The Law of Win/Win says, let’s not do it your way or my way; let’s do it the best way ~ Greg Anderson, author and founder of the American Wellness Project.