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Arbitration
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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