Expert determination refers a specific technical or accounting question to an expert whose decision binds the parties. It is distinct from arbitration and is under-used.
Where it fits. Purchase price adjustments, earnout calculations, valuation disputes, rent reviews, technical specification disagreements, and contract questions turning on measurement rather than on legal interpretation.
Advantages. Speed measured in weeks, low cost, an expert decision-maker, and no hearing in most cases.
Key differences from arbitration. An expert is not bound by procedural fairness rules to the same degree, the decision is not an award enforceable under arbitration conventions, and challenges are limited to whether the expert answered the question asked and acted in accordance with the mandate — manifest error where the contract preserves it.
Drafting essentials. Define the question precisely; state the materials the expert may consider and the procedure for submissions; require the expert to act as an expert and not as an arbitrator, stated expressly; specify qualifications and an appointing body if the parties cannot agree; provide that the determination is final and binding absent manifest error or fraud; and allocate costs.
The recurring failure. A clause referring disputes to an accountant without defining the scope, so that the parties then litigate whether a particular disagreement is an accounting question or a breach of contract claim.