Contracts are legal agreements made between parties. When one party doesn't uphold their responsibilities in the contract, there is a chance that the other will take legal action for breach of contract. Not all of these cases end up in a trial court. Instead, many breaches of contract matters are handled through alternative dispute resolution methods. This includes mediation and arbitration, both of which might be specifically included in a resolution clause in the contract.
When you are reviewing a contract, you should be sure that you will be able to meet the terms of your side. Anything that isn't met could open you up for legal action. This is why it is important to familiarize yourself with the terms of the contract. Sometimes, mediation, arbitration or alternative dispute resolution clauses are included. These can bind you to use those methods if there is ever a disagreement related to something in the contract.
No matter which side of the matter you are on, you should review a few specific points about the clause. One of these is who is going to pay for the process. It might be split, but one party might be specifically liable for covering the expense. Another consideration is where the hearing or meeting will be held. This might not be a concern if the parties are in the same area; however, long-distance contracts might mean that you will have to travel to attend.
There might be other terms, such as what happens if an expert needs to be called in, so be sure you review those. It is always better to err on the side of caution in these matters than it is to find out later that you weren't protected by the contract.