A contractual arrangement often presented during the purchase of a vehicle, this agreement outlines a process for resolving potential disputes outside of the traditional court system. It involves submitting disagreements to a neutral third party for a binding or non-binding decision. For example, should a buyer experience undisclosed mechanical issues shortly after purchase and be unable to resolve the matter with the dealership, the terms of this agreement would dictate how the conflict is handled.
Such a provision can offer a potentially faster and less expensive route to resolution than litigation. This method can avoid the lengthy delays and high costs often associated with court proceedings. Historically, these agreements have become increasingly common in consumer transactions, reflecting an effort to streamline dispute resolution and manage legal expenses. The enforceability and scope of these provisions can vary depending on applicable state and federal laws.
