1. In April 2013, two firms - BDM and AWB - entered in a $2 million contracts for the sale and purchase of goods by instalments. The contract contains the following clause:
Clause 4: If a dispute arises out of the agreement, the parties promise that before taking court action they will first try in good faith to resolve the dispute resolution by arbitration under the Commercial Arbitration Act (2012).
The two parties later on had a major dispute about whether BDM had supplied goods of the agreed standard. AWB tried to terminate the contract. AWB took court proceedings to make BDM took back the goods it supplied, to recover $350,000 that AWB had paid for those goods and to obtain a further $200, 000 in damages.
Required:
(a) What disadvantages does the court system have as a system for resolving disputes between the parties to a commercial contract?
(b) Whether Clause 4 is enforceable in the contract between the two firms?
(c) Advise BDM as to its legal rights against AWB under Clause 4 of their contract.