Defect Dispute Resolution Clause Samples
The Defect Dispute Resolution clause establishes the process for resolving disagreements between parties regarding the existence, nature, or responsibility for defects in goods, services, or works provided under a contract. Typically, this clause outlines steps such as notification of the alleged defect, a period for investigation or response, and escalation procedures like mediation or arbitration if the dispute cannot be resolved informally. Its core function is to provide a clear, structured mechanism for addressing defect-related conflicts, thereby minimizing delays, reducing litigation risk, and ensuring that both parties have a fair opportunity to present their case.
Defect Dispute Resolution. (i) The Parties agree to resolve disputes concerning the following matters pursuant to this Section 6.4(f): (A) the existence and scope of a Defect, Title Benefit or Defect Adjustment Amount; (B) the Defect Amount for a Defect Property or the Title Benefit Amount for a Title Benefit Property; and (C) the adequacy of Seller’s Title Defect curative efforts as to whether a Title Defect continues to exist or Purchaser’s reasonable satisfaction of such efforts (the “Defect Disputed Matters”).
(ii) The Parties agree to attempt to initially resolve all Defect Disputed Matters through negotiations between the Parties. If the Parties cannot resolve a Defect or Title Benefit dispute on or before Closing (each, a “Disputed Defect” and a “Disputed Title Benefit,” respectively), solely for purposes of determining the Closing Payment (and subject to the final calculation of the Defect Adjustment Amount as part of the final determination of the Adjusted Purchase Price under Section 8.4(b)), the Defect Adjustment Amount shall be calculated as if Purchaser’s position on each Disputed Defect were correct and as if Seller’s position with respect to each Disputed Title Benefit were correct (the resulting amount, the “Closing Date Defect Adjustment”); and, following Closing, the Defect Disputed Matters will be finally determined by binding arbitration as described in Section 6.4(f)(iii).
(iii) The Defect Disputed Matters will be finally determined by binding arbitration pursuant to Section 12.2(b), provided, however, that the independent arbitrator appointed pursuant to Section 12.2(b) shall be (A) in the case of Disputed Defects that are Title Defects or Disputed Title Benefits, an oil and gas title attorney licensed in North Dakota with a minimum of ten years’ experience with title defects affecting the types of properties which are the subject of the Defect Disputed Matters and (B) in the case of Disputed Defects that are Environmental Defects, an environmental attorney qualified by education, knowledge and experience with environmental defects affecting the types of properties which are subject to the Disputed Defects and having a minimum of ten years’ experience with such types of defects and properties. The arbitrator shall employ such independent attorneys, petroleum engineers and/or other consultants as deemed necessary. Notwithstanding anything to the contrary set forth in Section 12.2(b) (x) on or before 45 days after Closing, Purchaser and Seller shall present their...
Defect Dispute Resolution. In the event Buyer and Seller cannot in good faith resolve a dispute involving the existence of a Defect or the effectiveness or adequacy of curative performed or obtained by Seller (including the alternative heirship information allowed pursuant to Section 7.3(e)), Buyer and Seller shall resolve such dispute pursuant to the terms of this Section. The Parties agree to submit all such disputes concerning title matters to binding arbitration in Houston, Texas, such arbitration to be conducted as follows. The arbitration proceeding shall be submitted to a neutral arbitrator approved by ▇▇▇▇▇ and Seller who is an attorney licensed in Ohio with at least 15 years experience in preparing oil and gas title opinions involving properties in the regional area where the lands covered by the Leases are located as to title Defects, or with at least 15 years experience regarding environmental issues and disputes relating thereto as to environmental Defects (as applicable, the “Arbitrator”). The arbitration proceeding shall be conducted by the American Arbitration Association in accordance with its commercial rules, with discovery to be conducted in accordance with the Federal Rules of Civil Procedure. The arbitration shall be governed by Texas law, except to the extent Ohio law necessarily governs such matter as it relates to real property issues or Ohio Applicable Environmental Laws. Buyer and Seller shall each submit written materials to the Arbitrator within ten (10) days of the selection of such arbitrator explaining their position regarding the title or environmental dispute. The Arbitrator shall conduct a hearing, if necessary, no later than thirty (30) days after the selection of such arbitrator, and the Arbitrator shall render a written decision within fifteen