| Lola was very excited when she purchased her first car. She put $ 500 down and agreed to pay the remainder of the purchase price in installment payments. Lola's agreement with the lender who financed the transaction was set forth in a Retail Installment Sales Contract. After she obtained the loan for the car, Lola learned from one of her friends that the rate of interest on her car loan was excessively high. Lola suspected that the lender may have discriminated against her by charging such a high interest rate. Lola carefully re-read the Retail Installment Sales Contract and noticed that, to the extent she had a dispute with the lender, arbitration was the method for the resolution of the dispute.
What Is Arbitration?
Arbitration is a type of alternative dispute resolution. In arbitration, the parties to a dispute submit their dispute to a neutral third party, known as an arbitrator. The power of the arbitrator is determined by the contract between the parties. Although there are different types of arbitration, in the fact scenario described above, the arbitrator would render a binding decision on the parties.
How Is Arbitration Different From A Trial?
In many respects, arbitration resembles a trial. Each party to the dispute presents its case to the arbitrator, the arbitrator considers the evidence and the parties' arguments, and renders a decision. An arbitrator, however, is not a judge. While a judge is a government employee, an arbitrator is not. Furthermore, while there is a public record of nearly every trial, an arbitration is a private proceeding between the parties to the dispute.
What Are Some Of The Benefits Of Arbitration?
- less expensive than litigation (in most circumstances)
- less time consuming than litigation
- private
How Is The Arbitrator Selected?
In most cases, the agreement of the parties will determine how the arbitrator is selected. Usually, the parties to the dispute select the arbitrator. The important factor is that the arbitrator is neutral.
Factors to consider in arbitration:
- whether you think you need an attorney to represent you
- the cost, if any, to you
- the time commitment involved on your part
- how to present your case if you choose not to hire an attorney
- what documentation you need to support your case
Where can I find more information on arbitration?
- Better Business Bureau
- State Office of the Attorney General/Consumer Protection Unit
- American Arbitration Association - www.adr.org
- The Association for Conflict Resolution - http://www.acrnet.org/
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