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Arbitration agreements—tough to overcome

John Gonzales and Jack D’Aurora recently produced a podcast on arbitration that is available on this website. One of the issues they covered is the difficulty in overcoming a properly drafted arbitration agreement. A recent appellate court decision emphasizes the point in a case concerning a car purchase.

Dissatisfied with the car he purchased, the buyer wanted to unwind the deal, and so he filed suit against the dealer. The dealer asked the court to dismiss the suit because the buyer had agreed in writing to arbitrate any disputes concerning the car. The trial court agreed and dismissed the action.

On appeal, the buyer argued the arbitration provision was unconscionable, that he didn’t notice it when signing the documents and that he was “mentally exhausted” when signing. The facts did not support his case. The buyer had spent a considerable amount of time negotiating the price and had left the dealership with unsigned documents so that he could ponder the transaction overnight. In addition, the buyer had taken some college courses, and the arbitration agreement was not hidden in fine print.

Having found nothing procedurally wrong with the transaction, the court upheld the trial court’s decision. Whatever the buyer’s claims were, they have to be arbitrated.

What’s the take-away? When presented with legal documents, read them carefully before signing. If you see something objectionable, speak up and try to negotiate out what you don’t like. It’s unlikely the dealer would have agreed to eliminate the arbitration agreement. Then again, you never know. Even if the dealer had refused to eliminate the agreement, the buyer could have better evaluated his options at that point.

[Khan v. Taylor Cadillac, Inc., 2017-Ohio-8120.]

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