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In the early 1980's, Gerry, the CEO of a small hotel management company in the Midwest, saw it coming. Tensions between his operating team and one of his hotel owners had escalated over what had seemed like a straightforward issue - whether to change a restaurant that had seen better days. The planning had gone well at first, but over time went from bad to worse as result of misundertandings and disagreements over the economics. Market conditions were deteriorating and the owner, strapped for cash, pulled the plug. Later, with earnings in decline and a performance test default in the contract on the horizon, the relationship collapsed into two years of severe acrimony and litigation. Gerry and his attorney realize how different it could have been. They decided in future management contracts they would insis on a provision requiring the parties to resolve their disputes through arbitration rather than court litigation. The outcomes would be binding and they would hopefully save some money. The decision was a smart one. The company is now larger, having tripled in size over the years and, while it hasn't avoided litigation altogether, most of its disputes have been resolved through arbitration at a fraction of the cost of full-scale litigation... To read the complete article, click here to download the printable pdf file (63 kb).
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