Dispute Resolution Clause
A dispute resolution clause sets out how disagreements will be handled before anyone heads to court — often saving time, cost and the relationship.
What's included
- Understand the purpose of a dispute resolution clause
- See a staged escalation approach
- Appreciate why notice and good faith matter
- Recognise how it affects later recovery steps
- Know when the clause should be reviewed
6 min read
The clause
This is general sample wording for an escalating dispute resolution clause. Replace each [placeholder].
DISPUTE RESOLUTION
(a) If a dispute arises out of this agreement, the party raising it
must give the other written notice describing the dispute.
(b) Within [number] business days, senior representatives of each
party will meet (in person or by call) and try in good faith to
resolve it.
(c) If the dispute is not resolved within [number] days of the
notice, the parties may refer it to [mediation / further steps].
(d) This clause does not prevent a party from seeking urgent relief,
or from recovering an amount that is admitted and not genuinely
in dispute.Don't let it block genuine debts
A good dispute clause channels real disagreements into a sensible process — notice, a senior-level conversation, then escalation — which often resolves matters faster and more cheaply than litigation. The trap is letting it become a stalling tool. That is why paragraph (d) matters: it preserves your ability to pursue an amount that is genuinely owed and not the subject of a real dispute, so a debtor cannot manufacture a "dispute" simply to delay payment.
How to use it
Include the clause in your terms and actually follow the steps when a genuine dispute arises — skipping them can come back to bite you. Keep notices and meeting notes. Where the so-called dispute is really just non-payment of an admitted amount, rely on paragraph (d) and treat it as a recovery matter; you can refer the debt rather than be tied up in a process designed for genuine disagreements. For background on separating real disputes from delay tactics, see the default clause template.
Not legal advice
This is a general template and general information only — not legal advice. How a dispute clause should be structured, and how it interacts with your recovery rights, depends on your circumstances. Have it reviewed by a lawyer before you rely on it.
Tips
- A dispute clause channels disagreements into a sensible process.
- Notice and good-faith engagement come before escalation.
- Carve out admitted, undisputed amounts so it cannot be a stalling tool.
- Follow the steps you set, and keep the records.
FAQ
Can a debtor use this clause to avoid paying?
A carve-out for admitted, undisputed amounts is designed to prevent exactly that. Genuine disputes still go through the process. This is general information, not legal advice.
Do I have to follow the steps before suing?
If your agreement requires it, skipping the steps can cause problems. Take advice if you are unsure whether a dispute is genuine.
Should the clause require mediation?
Many do, as a cheaper step before formal proceedings. Whether to include it depends on your preferences and the relationship.
Templates are a head start — not legal advice
Customise to your business and have important documents reviewed. Need to recover a debt? We can help.