Which of the following is the material difference between an arbitration agreement and an ordinary contract?
Answer & explanation
Correct answer: option 3
The correct answer is: Both (a) & (b) are correct.
Let's analyze each option:
Option 1: This statement accurately describes a key difference between ordinary contracts and arbitration agreements. In general, obligations in ordinary contracts are not specifically enforceable, meaning the court cannot compel a party to perform their obligations. Instead, the non-breaching party can only claim damages.
Option 2: This statement also highlights a critical distinction. While breach of an ordinary contract typically leads to damages, the remedy for breaching an arbitration agreement is different. The focus is on enforcing the agreement itself, requiring the parties to participate in arbitration as stipulated.