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How to handle a commercial lease dispute

by | Sep 23, 2022 | Contract Interpretation

A commercial lease outlines the responsibilities of both the landlord and business tenant. Although the ideal lease would contain details and give clarity to every situation, this is not often the case.

If a dispute arises regarding one of the lease’s terms, there are a variety of options both parties can choose from to resolve the issue.

First, check the lease clauses

A lease contains many different clauses, and one may include a dispute resolution clause. If this is the case, the lease states that any dispute will use a particular method to resolve it. According to the American Bar Association, arbitration clauses have been common in commercial agreements, but this method can end up being just as expensive as going through court.

Consider the three main methods for dispute resolution

If the lease does not state which dispute resolution to use, the Harvard Law School Program on Negotiation discusses the three main options the two parties can choose from:

  • Litigation: Most people are aware of how litigation works. Both sides present evidence and witness testimonies to a judge or jury and judge. Both sides are often able to come up with a settlement agreement prior to the court trial.
  • Mediation: Mediation is a more collaborative process than the other two methods. A mediator works with both sides to help them come up with an agreeable and sustainable decision.
  • Arbitration: Although the ABA warned about using arbitration clauses in commercial leases, this method can still be beneficial. Each party presents its side to an arbitrator, who makes a binding decision based on the evidence presented.

Choosing which method to use depends on a variety of factors, including how much each party wants to spend, how complex the dispute is and how well the parties are able to communicate.