People often use the terms arbitration agreement and arbitration clause as if they were the same. They are closely related, and in practice they overlap, but the wording matters when you are reading a contract or deciding how to resolve a dispute.
What is an arbitration clause?
An arbitration clause is a provision inside a larger contract, such as a services agreement, lease or employment contract. It says that disputes under the contract will be resolved through arbitration instead of a lawsuit. You can see examples in our sample arbitration clauses.
What is an arbitration agreement?
An arbitration agreement is the commitment to arbitrate. It can be a clause in a contract, or it can be a separate document that the parties sign. An agreement can also be made after a dispute starts, when both sides decide to arbitrate.
Key differences
- Where it appears: A clause sits inside another contract. An agreement can stand alone.
- When it is made: A clause is usually written before any dispute. A stand alone agreement can be signed after a dispute arises.
- Effect: Both can require the parties to arbitrate if properly formed.
What a good clause or agreement covers
- Which disputes are covered
- Which rules apply and who administers the case
- Whether the decision is binding
- Where or how hearings take place, including online
- How costs are handled
Why it matters
The wording decides whether you can go to court or must arbitrate, and which rules will apply. Unclear language is a common source of fights over whether arbitration is required at all. Read our guide on dispute resolution clauses in contracts for more detail.
Next step
If your contract names arbitration, you can learn how online arbitration works and start a case in the eFile portal.
