Essential elements for effective arbitration agreements
In the year 2018, it was ruled by the US apex court that without the violation of national labors relations act, employees will be asked by the employers to sign a class-action waiver provision.
With the arrival of this decision the employers were on the stage of reconsidering the requirement of the employees for signing the agreement of arbitration which are binding in nature, and if it is to be done some important elements that are must in that agreement are : -
? Commanding law of arbitration agreement= only written employment agreements of arbitration are governed by the federal law, it also includes the interstate commerce, which makes the agreement to be ruled as a contract under the laws of the state.
? Existence of a contract = The state under its law has the power to review the legality of the existence of the few points, which are:-
? The capacity of the parties to contract, ? Mutual agreement on the facts or terms, ? Consideration should be valid, ? There should a benefit to the signor.
It becomes the duty of the employer to ensure that no minor person, i.e. no person below the age of 18 years should be a part of the arbitration agreement, and also that no lunatic ( a person who does not have the mental capacity), should be a part to this agreement without the assistance of the legal guardian.
When we talk of mutually agreeing on something, the parties should agree on the same footing and then carry the execution of the contract.
? Consideration= the execution of a contract is not possible without consideration therefore it becomes necessary on the part of the employer to ask the employees to sign the arbitration agreement when he is ready to provide them consideration in exchange.
? Mutuality= an arbitration agreement should be mutually decided and should not be inclined towards the interest of the employer.
? Class-Action waiver= this provision prevents the employees from bringing unnecessary lawsuits and arbitration against the employer.
? Opt out provision= to restrict the agreement from becoming too favorable for the employer, there should be opt out provision or clause, where the employee has the right to reject an arbitration in certain given time.