That arbitration clause almost cost us $300k

Ngl, I was reviewing a vendor contract for a SaaS deal last month and almost skimmed past the arbitration clause. It said we had to arbitrate in Delaware, but we're based in Austin and the vendor is in London. I flagged it to legal and we got it changed to virtual arbitration with Texas law. My boss told me later that clause alone could have added $300k in travel and legal costs if we ever had a dispute.

2 comments

2 Comments

grantthomas1d ago

300k seems like a pretty high estimate unless you were planning on some really aggressive litigation. I've dealt with a few arbitration clauses over the years and the travel costs are real but usually more like 10k or 15k for a few trips. Did legal actually calculate that number or was it more of a "worst case" guess from your boss? Also if you're just buying a SaaS product and not building something custom the odds of a serious dispute are pretty low to begin with.

mark_hernandez121d ago

idk @grantthomas might be right unless you guys were planning a full blown trial with multiple trips to Delaware. feels like those numbers get thrown around to scare people into compliance.