When drafted properly, expert determination clauses can result in cost-effective resolutions for business disputes and avoid delays in court proceedings.
Expert determination involves hiring someone who has the expertise required to determine the outcome of a dispute when a business relationship goes south. It is a kind of alternative dispute resolution (ADR) which involves appointing an independent third party to decide a dispute’s outcome.
Unlike arbitration, courts have limited control over the activities of the expert. And although some uncertainty can arise surrounding the expert determination, the advantage of hiring an expert is that the determination can be short and relatively cost-effective. The earlier a dispute is resolved, the cheaper the outcome for both parties in the long run.
Expert determinations are binding unless the contract clause states otherwise, or it is found that the determination does not follow the requirements of the contract.