How Do Arbitration Clauses Work in Maryland?

Arbitration clauses are a common element in many contracts and terms and conditions agreements throughout the country, and Maryland is no different. Arbitration agreements allow employers and businesses to protect themselves by lowering the potential financial burden if a contract or dispute goes to court. Alternative dispute resolution can be a great thing, but it is not appropriate for every situation. How do arbitration clauses work in Maryland?

What Makes Arbitration Clauses Enforceable?

An arbitration agreement can exist between two or more parties to resolve things with an arbitrator instead of taking things to court. However, every arbitration agreement is not necessarily legally valid if it is presented to the court. Maryland has a special law, the Maryland Uniform Arbitration Act (MUAA), that dictates how arbitration clauses can be used in the state. A written clause cannot be revoked unless it is invalid or unenforceable.

An arbitration clause in a contract might be invalid, as some businesses do not consult with an experienced business attorney like Mobley and Brown, LLP before creating one. Some of the grounds that a clause can be challenged on include:

  • Waiver: If one party acted in a manner that indicated without a doubt that they were not actually interested in seeking arbitration for legal claims, it would act as a waiver. This could occur if a party immediately filed suit instead of starting the arbitration process.
  • Fraud: If a party misrepresented or omitted a material fact in order to convince the other parties to sign the arbitration clause, that would count as fraud.
  • Duress: If a party was coerced or threatened to sign the contract against their best interest, it could be argued that they signed the arbitration clauses under duress.
  • Unconscionability: Finally, if one party did not have a significant amount or an equal amount of bargaining power when entering the contract, it could be argued in court.

If arbitration clauses themselves are signed on contracts that are invalid, that also automatically invalidates the arbitration section. Remember that every arbitration clause is not applicable to every situation, so there might be disagreement over whether or not a particular clause requires arbitration. Your business attorney at Mobley & Brown, LLP is here to help.

Contact Mobley & Brown, LLP for Help with Arbitration Clauses

If you are part of an arbitration agreement and unsure it if is valid or you need help and you are unsure where to turn, 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.