What is the function of a Commercial Lease Arbitration Clause?

The function of a Commercial Lease Arbitration Clause is to specify disputes that shall be referred to arbitration. This means that when conflicts arise between the landlord and tenant regarding the terms of the lease or any issues that develop during the tenancy, the arbitration clause outlines that these disputes must be resolved through arbitration rather than traditional litigation. This process allows for a potentially quicker, more efficient, and sometimes less costly resolution process compared to going through the courts, preserving the business relationship between the parties involved.

In contrast, elements like outlining payment terms, designating the lease's duration, or determining the responsibilities of the landlord are essential components of a lease agreement but do not fall under the specific purpose of an arbitration clause. Those elements are generally addressed within the primary terms of the lease and are separate from how disputes are resolved. The arbitration clause specifically serves to guide what happens if a disagreement occurs, making it a critical aspect of the lease concerning conflict resolution.