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What is Arbitration and Award?

Arbitration is the process where a third party looks at the evidence shown by the parties and makes a decision. The parties usually agree to arbitration as part of a contract before any problem even comes up.

Having an agreement for arbitration in a contract or part of the contract that involves the plaintiff and defendant’s dispute may be used as an affirmative defense. 


Example:  Ty and Danny signed a contract for Ty to buy eggs from Danny’s farm.  A clause in the contract states that any disputes will first go to arbitration.  Ty buys the eggs but later becomes upset when half fail to hatch.  Ty and Danny then go to arbitration. At arbitration the third party looked at the evidence shown by both sides and orders Danny to refund Ty half of her money.  Ty doesn’t think the third party awarded large enough money damages and files a lawsuit against Danny. Danny may be able to assert an arbitration and award affirmative defense.  Arbitration awards are favored by the courts as a way to take care of disputes and the court will try to uphold the arbitration award.


To do more research, look up: Texas Civil Practice and Remedies  Code Section 171.001 and Transwestern Pipeline Co. vs. Horizon Oil & Gas Co., 809 S.W.2d 589 and City of San Antonio v. McKenzie Const. Co., 136 Tex. 315.


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