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Arbitration
Does
OADA recommend a particular arbitration agreement?
No.
Arbitration agreements should be evaluated
to determine whether they are
“unconscionable”.
Your evaluation should be a two step
process:
-
First,
review the terms of the agreement.
Are they fair and reasonable? If not,
the agreement may be determined “substantively
unconscionable” by
Ohio
courts.
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Second,
think of your consumer base.
Is it likely that your customer will
not understand the arbitration agreement due
to factors such as age, education,
intelligence, business acumen, experience in
similar transactions, and how you will explain
the terms? If the agreement favors your
dealership to the detriment of a consumer who
has less education, intelligence or
experience,
Ohio
courts may find that the arbitration agreement
is “procedurally unconscionable”.
Are
there any “do’s & don’t’s” of
evaluating an arbitration agreement?
Here
are a few do’s and don’t’s to consider when
evaluating an arbitration
agreement:
DO
NOT:
require the customer to arbitrate in
order to complete a transaction.
When a customer has no ability to choose,
courts question whether the agreement is
procedurally unconscionable;
DO
NOT:
hide
the arbitration agreement.
The agreement should be conspicuous and in
type size that is easily read.
DO
NOT:
be stingy when allocating
responsibilities for costs and fees of
arbitration. Arbitration
proceedings are not necessarily cheap.
If a consumer is required to pay an amount
much greater than the amount they would need to
pay to file an action in court, an inference can
be made that this requirement is an attempt to
prevent a consumer from bringing any action at
all.
DO:
be generous when formulating responsibility
for the costs and fees associated with
arbitration. Give
the arbitrator the authority to award and allocate
costs and fees as necessary to ensure that no
party is unjustly burdened by these costs/fees.
DO:
expressly prohibit an individual from
arbitrating as a member of a class action. Class
action lawsuits are better suited to the structure
and procedural formality of our court system.
DO:
include a provision that limits the use
of arbitration to situations where one of the
parties requests arbitration.
There may be situations where a dealership
or its assignee does not want to arbitrate, such
as in collection matters.
If assignees must arbitrate, they may
choose not to purchase your contracts.
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