Monday, November 28, 2011

Jury trials

Why do companies include a waiver of jury trials in their contract terms?

In many jurisdictions a legal dispute that is taken to court will allow for a jury trial. The jury will decide upon both the fate of the parties and any damages that must be paid. When a company
includes a term in their agreement that has both parties waive their right to request a jury trial they are doing that for a reason. They want both the decision and the damages allowed to be based upon the facts and the law, not the potential emotions or prejudices of the potential jurors. For example in a suit between a small company and a large company, a jury or individual juror may emotionally want to side with the small business just like jurors like to side with injured individuals in suits against large insurance companies. They may relate more to the small business or even be an owner of a small business. They could have been laid-off or made redundant after a large business acquired the small company the work for.

While judges may have their own prejudices they still have to make the decision based upon the facts of the case and the law. Once the facts are established they need to apply the law in making their ruling. They know that if they make a wrong ruling based upon the law, the case will be appealed and the finding could be overturned. They also know that they should follow precedent in any award of damages.

Should you agree to a waiver of jury trials in your agreement? That’s something your legal people should tell you. In my years of negotiating contracts I only encountered one supplier that simply refused to agree to a waiver of a jury trial and that was at the direction of their president who was also the founder of the company. He felt that if he could testify before a jury he could convince them that his company was right and the other company was wrong.Whether he was right or not I don’t know. What I do know is that trials with juries traditionally take longer and cost more in legal fees.

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