Expert Determination Clause
Also called: Expert Determination · Technical Referee Clause
An expert determination clause routes specific, technical disputes — such as a valuation disagreement or a technical performance dispute — to an independent expert for a binding decision, instead of arbitration or litigation. It's faster and cheaper than formal proceedings, but the expert's decision has very limited grounds for appeal.
In more detail
Expert determination works best for disputes that are genuinely technical or factual rather than legal — was a deliverable built to the agreed specification, what is the fair market value of an asset — where a subject-matter expert can resolve the question faster and more credibly than a judge or arbitrator.
Unlike mediation, the expert's decision is typically binding, similar to arbitration — but the legal grounds for challenging an expert determination afterward are usually narrower even than for arbitration, making the choice of a competent, genuinely independent expert critical.
Contracts often carve out expert determination specifically for one category of dispute (valuation, technical compliance) while routing everything else through the general dispute-resolution clause — the two mechanisms coexist rather than one replacing the other entirely.
A shareholder agreement routes disputes over the fair market value of shares — for a buy-back or exit — to an independent valuation expert, whose determination is final and binding, rather than to arbitration or court, which would be slower and less suited to a technical valuation question.
What our lawyers check
- Which specific categories of dispute are routed to expert determination
- How the expert is selected, and their independence from both parties
- Whether the expert's decision is genuinely binding, and how narrow the grounds for challenge are
- The process and timeline for the determination
Contracts where this clause matters
Related terms
This definition is general information about commercial contracting practice, not legal advice. How a clause operates depends on the specific wording of your agreement and the law that governs it. For advice on your contract, have it reviewed by a lawyer.
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