Procedure: Overview, definition and example
What is a procedure?
A procedure refers to a defined and structured process or series of steps outlined in a contract or agreement to achieve a specific outcome or resolve an issue. Procedures often relate to dispute resolution, termination, grievance handling, or operational requirements, ensuring that actions are carried out consistently and in compliance with the contract.
For example, a contract might include a procedure for filing complaints, specifying the steps and timelines each party must follow.
Why is procedure important?
Procedure is important because it establishes a clear framework for how specific actions or processes are to be carried out. This reduces ambiguity, promotes fairness, and ensures that all parties understand their roles and obligations.
By including procedures in contracts, parties can avoid disputes, streamline operations, and ensure that issues are resolved efficiently and in accordance with agreed-upon terms.
Understanding procedure through an example
A vendor agreement includes a procedure for resolving disputes. The clause specifies that if a dispute arises, the parties must first engage in good-faith negotiations for 30 days. If the issue is not resolved, the dispute must then be submitted to arbitration in a designated jurisdiction. This step-by-step procedure ensures a clear and fair process for handling disagreements.
An example of a procedure clause
Here’s how a procedure clause might appear in a contract:
“In the event of a dispute, the Parties agree to follow the following procedure: (1) Engage in good-faith negotiations for a period of 30 days; (2) If no resolution is reached, submit the dispute to mediation; and (3) If mediation fails, refer the matter to binding arbitration as outlined in this Agreement.”
Conclusion
Procedures are essential for creating consistency, clarity, and fairness in contracts. By clearly defining the steps and processes to be followed, these clauses help parties navigate critical actions, resolve disputes, and maintain compliance with the agreement. A well-drafted procedure clause promotes transparency and ensures smooth execution of the contract.
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.