Binding arbitration is a process where the decision rendered by the arbitrator is contractual-the parties agree in advance to accept the arbitrator’s ruling. If you read the small print on consumer or loan contracts, you may discover that you have agreed to binding arbitration and occasionally the waiver of the right to use other processes.
A situation that led to binding arbitration occurred when a real estate agent met a new client one afternoon who had pictures of a house she wanted to see. The agent showed her the home. An offer on the house was made and accepted by the seller that day. The problem was that another agent had been working for months with this client, and the pictures of the home came from the original agent. Which agent should get the commis sion from the sale-the agent who had worked with the client the longest or the new one who closed the deal? The case was brought before a Realtor’s Association Arbitration Panel. The panel, in a very formal setting, heard from each realtor, asked questions, weighed the evidence, and decided that the agent who first showed the home would receive the com mission. Once the panel had made its decision, the parties were required to abide by it. The only recourse was through appeal, and then an appeals board within the association would hear the case.