The Indian Contract Act of 1872 contains a provision known as the ADR provision, or Alternative Dispute Resolution provision. This provision outlines ways in which disputes between parties to a contract can be resolved outside of the traditional court system.

The ADR provision recognizes that in many cases, resolving disputes through litigation can be expensive, time-consuming, and can put a strain on relationships between parties. As such, the provision encourages the use of alternative means of dispute resolution, such as mediation and arbitration.

Mediation involves a neutral third party assisting the parties to reach a mutually acceptable agreement. The mediator does not make decisions, but rather helps the parties to communicate and negotiate effectively.

Arbitration, on the other hand, involves a neutral third party who has the authority to make a binding decision on the dispute. Arbitration can be more formal than mediation, but is often less expensive and quicker than litigation.

The ADR provision requires that parties to a contract include a clause that outlines their agreement to use alternative dispute resolution methods in the event of a dispute. This clause must be included in the contract itself, and cannot be added after a dispute has arisen.

Parties must also agree on the process for selecting a mediator or arbitrator, as well as the rules and procedures that will govern the alternative dispute resolution process.

The Indian Contract Act`s ADR provision is an important tool for resolving disputes between parties to a contract. By encouraging the use of mediation and arbitration, this provision can help parties to avoid costly and time-consuming litigation while preserving their relationships. If you`re drafting a contract in India, be sure to include an ADR provision to ensure that you have options for resolving disputes outside of the courts.