Certain litigation: Overview, definition, and example
What is certain litigation?
Certain litigation refers to legal proceedings or lawsuits that are anticipated or specified in a contract or agreement. These types of lawsuits are generally expected to occur based on specific events, conditions, or disputes that arise between the parties involved. "Certain litigation" is often included in legal documents to acknowledge that a legal dispute may be inevitable under certain circumstances and to outline how it should be handled. The term can also be used to describe situations where there is a strong likelihood that legal action will be taken, whether due to breach of contract, violations of law, or other legal issues.
Certain litigation clauses are typically included in contracts to establish how disputes will be managed, specify jurisdiction, and set out any arbitration or legal action procedures.
Why is certain litigation important?
Certain litigation is important because it helps prepare both parties involved in a contract or agreement for the potential legal issues that might arise. By identifying and outlining potential disputes and how they will be addressed, certain litigation clauses provide clarity and reduce the chances of surprises during the course of a business relationship.
For SMB owners, understanding and defining certain litigation in contracts can help manage risk, prevent unnecessary legal battles, and ensure that the business is better prepared for any conflicts. It also ensures that both parties know what to expect regarding the resolution of potential disputes, reducing confusion and facilitating smoother negotiations.
Understanding certain litigation through an example
Imagine you own a small construction company and enter into a contract with a property developer to build an apartment complex. The contract includes a certain litigation clause that states that if either party is found to be in breach of contract, the dispute will be resolved through arbitration rather than a court trial. It also specifies that any legal action will take place in a designated jurisdiction.
In another example, you are a supplier providing products to a retailer. The contract includes a clause acknowledging that if there are disputes over product quality or delivery terms, certain litigation will involve legal action in a specific court system. By including this in the contract, both parties are aware of how any future legal issues will be managed, making the resolution process more efficient and transparent.
Example of a certain litigation clause
Here’s an example of what a certain litigation clause might look like in a contract:
“In the event of a dispute arising from or related to this Agreement, the Parties agree to resolve such dispute through arbitration in accordance with the rules of [insert arbitration organization]. The Parties acknowledge that certain litigation may arise from any breach of contract or violation of the terms herein and agree that any legal actions will be exclusively filed in the courts of [insert jurisdiction]. Both Parties further agree to bear their own costs in connection with the litigation or arbitration process, except as otherwise agreed upon.”
Conclusion
Certain litigation clauses are vital tools for managing the risks associated with legal disputes in business agreements. By defining how disputes will be resolved and specifying jurisdiction or arbitration processes, businesses can better prepare for any potential conflicts that may arise. For SMB owners, including certain litigation clauses in contracts provides greater clarity, reduces the likelihood of prolonged disputes, and ensures that both parties understand how legal matters will be handled. These clauses are key for maintaining smooth business relationships, even when legal issues emerge.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.