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Drafting Contractual Dispute Provisions Toolkit (PA)
Practical Law Toolkit w-009-1964 (Approx. 9 pages)
Drafting Contractual Dispute Provisions Toolkit (PA)
by Practical Law Commercial Transactions
| Maintained • Pennsylvania |
Resources for counsel to use when addressing potential contractual disputes between parties to commercial transactions agreements under Pennsylvania law, including sample clauses and drafting advice, step-by-step guides, and checklists covering mediation, arbitration, and litigation.
Parties to commercial agreements, for either the sale of goods or services, should generally include dispute resolution and litigation-related provisions to provide:
- A predictable path to recourse and limitations on the scope of potential disputes before any litigation.
- A favorable road map, in terms of both choice of law and choice of forum, for any disputes reaching the litigation phase, including whether to:
- resolve the dispute in court or by arbitration;
- try the case before a judge or jury; and
- require the losing party to pay attorneys' fees and costs.
This Toolkit contains alternative dispute resolution (ADR) and commercial litigation-related resources, including sample clauses and drafting advice, step-by-step guides, and checklists, to help counsel address potential contractual disputes between parties to commercial transactions agreements. For information on examining ways corporate counsel can reduce or eliminate litigation risks when faced with exposure in the US, see Practice Note, Avoiding and Managing Commercial Disputes in the US: Overview.
For a selection of boilerplate clauses for corporate and commercial agreements under Pennsylvania law, see Boilerplate Clauses (PA).
Alternative Dispute Resolution Clauses
To draft an ADR provision that affords a party maximum and timely relief, counsel should:
- Identify every type of significant and likely transaction-related dispute and ensure that the dispute resolution provision has procedures that allow favorable resolution of each. Different disputes may be amenable to different kinds of dispute resolution procedures.
- For disputes that need timely relief, such as those involving sole-source or just-in-time suppliers, ensure that the dispute resolution provision allows for the immediate use of emergency litigation or arbitration procedures (for example, temporary restraining orders and preliminary injunctions) without required dispute resolution processes involving executive meetings or mediation (see Practice Note, Equitable Remedies: Availability of Equitable Remedies in Arbitration). For more information on provisional remedies in Pennsylvania, see State Q&A, Provisional Remedies: Pennsylvania and Preliminary Injunctive Relief Toolkit (PA).
- Ensure that the dispute resolution provision maximizes its relief, for example, by requiring the parties to settle disputes:
- in a favorable forum; and
- under favorable governing law.
Commercial Litigation-Related Clauses
The parties should consider certain critical litigation-related provisions when drafting commercial agreements. For example:
- The governing law clause (also known as the choice of law clause) permits the parties to select the state law that governs the agreement. If the parties do not properly draft the clause, or fail to stipulate any governing law, the forum court unilaterally applies its choice of law rules to determine the appropriate substantive law.
- The submission to jurisdiction clause (also known as the jurisdiction clause or forum selection clause) permits the parties to select the forum in which a claim can be brought. This clause works with the governing law clause to provide some certainty as to how the agreement may be interpreted or a dispute resolved. Parties may use this clause for:
- judicial proceedings;
- arbitration; or
- other alternative dispute resolution proceedings (for example, mediation).
- The waiver of jury trial clause is frequently included in complex agreements. Most sophisticated parties prefer that a judge hear and decide any dispute arising out of the agreement, rather than a jury of people who may not appreciate and understand the potentially complex issues involved in the litigation.
- The attorneys' fees provision specifies that the non-prevailing party in a lawsuit must reimburse the prevailing party for its costs and expenses, including attorneys' fees and court costs.
For more general litigation information for Pennsylvania, see State Q&A, Litigation Overview: Pennsylvania.
Commercial Litigation-Related Resources
Standard Clauses
For other commercial boilerplate clauses in Pennsylvania, see Standard Clause, Boilerplate Clauses (PA). For a short form version, see Standard Clause, General Contract Clauses: Boilerplate Clauses (Short Form) (PA).