Man imposes his laws upon man. James Madison tells us that laws should not be overly voluminous or overly incoherent. Good luck on that score. I used to carry around the written U.S. tax code in law school for our tax class. I figured carrying around the tax code was good enough such that I did not feel compelled to go to the gym for exercise. That was before computers when law codes were written on heavy papyrus rolls.

Man by law has made a law of ‘an act of God.’ An act of God or what is also called a ‘force majeure event’ is an event beyond the control of parties to a contract which may prevent completion of the contract. And importantly an act of God may be grounds for cancellation of the contract. An act of God clause is the adult business version of the dog ate my homework. Wouldn’t an act of God be a good defense in criminal court? Boy, I sure could have used it for myself in juvenile court.

How a contract party is to deal with a surprise event is written into the agreed upon terms of the contract. In contract writing an event that is not a part of the contract obligation but affects the ability to complete the agreement is the so-called an act of God clause. These clauses also go by the fancy name of a ‘force majeure clause.’ Such clauses are a man-made road map showing what to do because of an unplanned event. This type of clause is a little bit like putting the genie back in the bottle after it has been out on the town partying too much. One finds these clauses in wind energy agreements, right-of-way agreements, easements, oil and gas leases and general construction contracts.

Under some clauses, government rules which prevent a party from completing the contract may constitute grounds for a party’s legal non-performance of the agreement. So this is one situation in which you can legitimately blame the government.

What are these magical “events” which will excuse a party from completing a contact? There are as many possible events as man can devise in his mischievous little mind. An act of God event is simply whatever the agreed upon contract says it is. This is man-made law. Here is an example of an actual agreement: “The term ‘force majeure’ shall be Acts of God, strikes, lockouts, or other industrial disturbances, acts of the public enemy, wars, blockades, riots, epidemics, lightning, earthquakes, explosions, accidents or repairs to machinery or pipes, delays of carriers, inability to obtain materials or rights of way on reasonable terms, acts of public authorities, or any other causes. . . not within the control of the [contracting party] and which by the exercise of due diligence [the contracting party] is unable to overcome.” Looking at this clause, I will provide the reader with a few comments. First, it is written by someone rushing a bunch of ideas into a clause. It’s a little too shot-gunny. It is overbroad and needs focus. And it was written by a lawyer who has not experienced a tornado, flood or a debilitating blizzard.

No question. An act of God clause is one of several underappreciated stepsisters (that’s an East River expression) when parties and their attorneys draft and negotiate an agreement. Usually in a transaction parties give energetic attention to ‘The Money’ or to the conditions of contract performance, not realizing that an act of God event can cause equal if not greater trouble. How quickly money throws one off the scent. It’s the old story of greed outstripping prudence. The scope of an act of God clause depends on the specific terms of the agreement, so pay attention my honorable readers. Do not avoid focused common sense in the early stages when negotiating and drafting any agreement. Otherwise an uninsured accident is just over the next hill. An act of God is a peril outside of man’s control.

Mandatory arbitration is a court of last resort. When one arbitrates under mandatory arbitration there is no appeal, or even a right of reconsideration of the matter by the arbitrator if something went wrong. One’s legal rights to challenge a final arbitration decision are very limited. The arbitrator’s decision is almost absolute.

I know. I have sat as an arbitrator and have represented parties in arbitration.

Arbitration is defined as an alternative to litigation in which the parties are required to put their dispute before an arbitrator. The arbitrator, for good or ill, and without the benefit of a black robe, makes the final decision on the dispute. If one’s agreement contains a mandatory arbitration clause, you can’t go to court. (There are minor exceptions, but we will save that for another sermon).

Mandatory arbitration clauses can be found in easements, real estate contracts, water rights agreements, some mineral rights contracts, business agreements, and are often found in a public contract, that is, a contract with a government body or agency. An arbitration clause is sometimes buried in the agreement’s terms particularly in consumer agreements. Consumer agreements containing arbitration clauses, as described by an old labor leader, are akin to negotiations between a lion and a lamb in which the lamb wakes up the next morning in the stomach of the lion.

I find it commonplace for parties, and their attorneys, not to seriously consider the issue of arbitration when negotiating the language to be placed in an agreement. Big mistake. Never approach a goat from the front. Never approach a horse from the rear. Never approach an arbitration clause from any angle unless you and your well-seasoned counsel, have weighed the pros and cons while in a sober state of mind. Arbitration is a shortcut to justice, but there are many pitfalls, cliffs, dark places and precipices along the way.

South Dakota statutory law enforces and encourages arbitration clauses. And regarding the legitimacy of arbitration the state Supreme Court stated as recently as this year, “The plain language of [state law], being clear, certain and unambiguous, does not provide for a right of appeal from an order compelling arbitration.” The South Dakota Supreme Court some time ago gave its official blessing to arbitration as a dispute resolution process: “This Court has consistently favored the resolution of disputes by arbitration.”

Arbitration is faster and less expensive than litigation. These are its two most compelling attractions. But one rolls the dice in arbitration in that one can never be sure of the wisdom, fairness and competence of the sole judge of the affair – the arbitrator. In some arbitration clauses the parties have a right to agree upon a particular arbitrator. Arbitration itself is a private process meaning it is not a public event. This can be advantage in several situations.

So what are problems with arbitration? I have already painted a pretty colored picture in this piece, but will here elaborate a bit more.

No appeals are allowed. In small-dollar conflicts the costs of arbitration are not always justified. The rules of evidence in arbitration are a bit loose and that can be problematic. A pre-hearing exchange of evidence between the disputing parties is not as well managed as it is in litigation. If an arbitrator does not carefully follow the relevant law dealing with the problem, the decision of that arbitrator will still stand as a final decision.

Judges are a bit different. A judge is constantly looking over his or her shoulder. A judge is, or at least should be, always considering the consequences of a decision from the point of view of another court — the appellate court.