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Essential Elements of a Strong Arbitration Agreement in Wisconsin

Most business enterprises operate on a foundation of contracts. Vendor agreements, employment agreements, stockholder contracts, commercial deals, and more create a complex network of features that comprise and support the business. With each contract, the potential for growth and disputes are ever-present. While business owners can’t eliminate the possibility for conflict to arise, smart entrepreneurs can take steps to limit the likelihood that the argument will end up in court. Litigation can impose a financial and reputational burden on businesses. Arbitration, on the other hand, provides a streamlined and cost-efficient alternative to disputes. 

In this post, we help you understand what makes a contract legally binding in Wisconsin and explain the purpose and elements of a strong arbitration agreement

Mallery, s.c. provides effective legal services to businesses throughout Wisconsin. When you work with us, you typically work directly with a shareholder-level attorney at our firm. Because of our efficiency and extensive knowledge, we provide high-value legal services, often at a much lower cost than clients may expect.  

What Makes a Contract Legally Binding in Wisconsin?

Before we dive into understanding arbitration agreements, we first need to answer a fundamental question: How is a contract legally binding in Wisconsin? Even if you have a written and signed document, it may not be enforceable or sufficient to implement. 

Elements of an Enforceable Contract in Wisconsin

What makes a contract binding is when the following elements are present:

  1. There’s a valid offer. Someone must make an offer to enter into an agreement on stated terms. General comments expressing hope to someday partner with someone are insufficient to constitute an offer. 
  2. There’s a valid acceptance. The other party must accept the offer on the terms stated in the offer. If the acceptance adds or modifies terms, it’s most likely a counteroffer. 
  3. The contract is supported by consideration. Both parties need to have “skin in the game” under the terms of the agreement. For example, in an employment agreement, the employer gives up money to receive the employee’s services. In turn, the employee is devoting time and energy to their employer in exchange for wages and benefits. 
  4. The contract complies with the Wisconsin Statute of Frauds. The law may require that the contract be in writing and signed by specific parties. For example, agreements for the sale of goods for $500 or more usually must be in writing. Wisconsin law has additional requirements about when contracts must be in writing. 
  5. The subject matter of the contract is legal. 
  6. The parties had the legal authority to sign the contract and weren’t the victim of fraud or coercion when signing it. 

Further, you must file a breach of contract claim within the applicable statute of limitations to have a chance of recovering compensation. Under Wisconsin law, you may have up to six years to file a breach of contract claim against someone else. 

A breach of contract attorney can help you understand the deadlines that apply to your case and file a claim on your behalf. 

What Is an Arbitration Agreement?

An arbitration agreement is typically a dispute-resolution provision within a broader contract. Arbitration provisions are agreements between the parties to resolve a dispute through arbitration rather than filing a lawsuit. This provides greater predictability and limits legal and financial liability. 

Elements of a Strong Arbitration Agreement

Typically, arbitration agreements include provisions about the following matters:

  • A choice of law provision indicating what law will govern the contract; 
  • A provision saying what arbitration rules will apply; 
  • A statement about which arbitration court will decide the dispute; 
  • A statement disclaiming the right to file a lawsuit unless both parties agree; and 
  • What types of disputes the parties agree to arbitrate rather than litigate. 

A business attorney can help you identify additional provisions that you should include in your contracts to cover your bases. They can also review your existing contracts to determine how the parties agreed to resolve disputes. 

When Is a Contract Requiring Arbitration Legal in Wisconsin?

Under the Federal Arbitration Act, most arbitration agreements are legal and enforceable if they are valid under state law.

Mallery s.c.—Experience Contract Attorneys Serving Wisconsin

If you have questions about a breach of contract claim or an arbitration agreement, call our office or contact us online to discuss. We provide the top-tier representation you’d expect from Big Law with the value and personalized attention of a boutique firm. 

On our team is Alexandra Don, who earned a Certificate in Global Arbitration Law and Practice. In 2020 and 2021, the NAIOP named Alexandra a Developing Leader All-Star.

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