Binding vs Non binding agreementHow about binding versus non-binding agreements? Does having a non-binding agreement better than no agreement at all?

Expert Answers
mstultz72 eNotes educator| Certified Educator

Agreements or arbitration can be binding or non-binding.

The goal is settlement, regardless, I think, not a non-agreement.  Or is settlement no agreement at all?

In a non-binding arbitration no arbitration award whatsoever is issued.  In a binding arbitration, the arbitrators' decision is final and cannot be disputed or appealed.

So says John Kissel:

With non-binding arbitration, the arbitrator makes a determination of the rights of the parties to the dispute but this determination is not binding on them. The award given is just an advisory opinion. Here the role of an arbitrator is similar to that of a mediator in a mediation. However, unlike in mediation the arbitrator remains totally away from the actual settlement process though he might give suggestions. What happens after a non binding arbitration?  Subsequent to a non-binding arbitration, it is up to the parties involved; they are free to pursue their claims either via the courts, or by a binding arbitration.


litteacher8 eNotes educator| Certified Educator
I think that sometimes a non-binding agreement is worse than no agreement at all. If you have a non-binding agreement and one or both parties does not abide by it, then where are you? There are then more hurt feelings and bruised prides. It's better to just try to work things out, but get it in contract form.
besure77 eNotes educator| Certified Educator

A non-binding agreement basically states clear expectations of the agreement, while they may not be legal. In my opinion, it is better to have a non-binding agreement than not to have anything.

A binding agreement is a bit different. There are very clear terms to the agreement which are lawful.

krishna-agrawala | Student

The non-binding agreements are designed to crate clear understanding between the parties to the agreement on agreement reached between them, without creating legal binding on either party. This is helpful in many situations. For example, contracts for purchase of big complicated projects can be lengthy and complicated. Further the seller may have to invest considerable effort time and money in obtaining all the details to be included in a contract that is legal binding. In such a situation the supplier may not be willing to go ahead with contract finalization activities without the some assurance from the purchaser that the project order will be awarded to them. For this purpose the purchaser may issue a letter of intention of purchase that contains incorporates the details of terms of purchased till then.

Also contracts which permit each party to withdraw from the agreed arrangements also becomes a non-binding agreement. This kind of agreements is applicable only to ongoing relationships and arrangements rather than one time performance of some act.