DISPUTE RESOLUTION PROVISIONS Contractual Alternatives to Ease the Process ACC-Charlotte Contracts & IP Symposium November 1, 2013 ACC-Charlotte Contracts & IP Symposium November 1, 2013

Nelson Mullins Riley & Scarborough LLP Clause/ProvisionPurposeBenefitDrawbackNotes Escalation Clauses Typically mandatory Provides process to resolve disputes internally; Sets time frames and procedures that must be followed prior to formal dispute resolution Typically involve both parties designating increasingly senior reps to try to resolve disputes Informal, internal way of resolving disputes, often without attorneys; Valuable when maintaining the business relationship is key; Especially useful in billing disputes May delay time to file suit (though most clauses permit suit without internal escalation if Statute of Limitation is about to expire)

Nelson Mullins Riley & Scarborough LLP Clause/ProvisionPurposeBenefitDrawbackNotes Escalation Clauses Typically mandatory Provides process to resolve disputes internally; Sets time frames and procedures that must be followed prior to formal dispute resolution Typically involve both parties designating increasingly senior reps to try to resolve disputes Informal, internal way of resolving disputes, often without attorneys; Valuable when maintaining the business relationship is key; Especially useful in billing disputes May delay time to file suit (though most clauses permit suit without internal escalation if Statute of Limitation is about to expire) Mediation Clause Typically non-binding mediation Can be mandatory or discretionary Informal, external way of resolving a dispute short of litigation May further delay resolution of certain classes of disputes

Nelson Mullins Riley & Scarborough LLP Clause/ProvisionPurposeBenefitDrawbackNotes Escalation Clauses Typically mandatory Provides process to resolve disputes internally; Sets time frames and procedures that must be followed prior to formal dispute resolution Typically involve both parties designating increasingly senior reps to try to resolve disputes Informal, internal way of resolving disputes, often without attorneys; Valuable when maintaining the business relationship is key; Especially useful in billing disputes May delay time to file suit (though most clauses permit suit without internal escalation if Statute of Limitation is about to expire) Mediation Clause Typically non-binding mediation Can be mandatory or discretionary Informal, external way of resolving a dispute short of litigation May further delay resolution of certain classes of disputes Arbitration Clauses Can be mandatory or permissive Typically binding, with decision submitted to court for entry as a judgment Requires disputes to be submitted to ADR instead of proceeding through courts For many disputes, arbitration or mediation can be more cost effective and efficient May not want all disputes to go to ADR

Nelson Mullins Riley & Scarborough LLP Clause/ProvisionPurposeBenefitDrawbackNotes Choice of Law Sets law that will govern interpretation of contract and resolution of disputes Typically allows party with greater leverage to determine law to apply; Commercially savvy businesses often will compromise on New York It may require you to agree to applying a less favorable law to contract interpretation and dispute resolution

Nelson Mullins Riley & Scarborough LLP Clause/ProvisionPurposeBenefitDrawbackNotes Choice of Law Sets law that will govern interpretation of contract and resolution of disputes Typically allows party with greater leverage to determine law to apply; Commercially savvy businesses often will compromise on New York It may require you to agree to applying a less favorable law to contract interpretation and dispute resolution Choice of Forum Can be mandatory or permissive Sets forum for resolution of disputes Typically includes consent to personal jurisdiction May avoid jurisdictional disputes; If it's critical, make sure it's mandatory, not permissive May be unenforceable in certain types of transactions May be unenforceable in certain states. NC frowns on NC contracts that require the parties to litigate in other jurisdictions See, e.g., N.C. Gen. Stat. § 22B-3

Nelson Mullins Riley & Scarborough LLP Clause/ProvisionPurposeBenefitDrawbackNotes Choice of Law Sets law that will govern interpretation of contract and resolution of disputes Typically allows party with greater leverage to determine law to apply; Commercially savvy businesses often will compromise on New York It may require you to agree to applying a less favorable law to contract interpretation and dispute resolution Choice of Forum Can be mandatory or permissive Sets forum for resolution of disputes Typically includes consent to personal jurisdiction May avoid jurisdictional disputes; If it's critical, make sure it's mandatory, not permissive May be unenforceable in certain types of transactions May be unenforceable in certain states. NC frowns on NC contracts that require the parties to litigate in other jurisdictions See, e.g., N.C. Gen. Stat. § 22B-3 Jury Waiver Requires both parties to agree to a bench trial by affirmatively waiving right to jury trial (if one exists) Bench trials typically take less time and are more cost effective In some states, jury waiver clauses are unenforceable In some cases, a jury trial could be to your advantage See, e.g., N.C. Gen. Stat. § 22B-10