Waiving Right to Arbitration

On December 8, 2010, the Fourth District Court of Appeals issued its opinion in the business litigation matter: Price v. Fax Recovery Systems, Inc. The issue on appeal was whether or not a party could waive its right to mandatory alternative dispute resolution provided for in a binding contract by filing a responsive pleading in the lawsuit (in this matter, an Answer and Counterclaim). The Fourth DCA held that the  the defendant’s act of filing an answer and counterclaim did not constitute a waiver of his to right to arbitration provided by the parties’ otherwise binding contract. The right to arbitrate was deemed not to be waived because the defendant asserted his arbitration right in two separate filings prior to the filing of the  answer and counterclaim.

The insertion of alternate dispute resolution clauses is becoming more and more popular in Florida contracts in order to mitigate escalating litigation costs. This case stresses the importance of protecting a business’ rights by asserting the existence of a mediation or arbitration contractual clause at the onset of the litigation and prior to any responsive pleading.

Price v. Fax Recovery Systems, Inc.

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