Dulaney, Lauer & Thomas Blog

Mandatory arbitration – good for business, bad for you

Have you signed a mandatory arbitration clause when buying goods or services? Do you even know what one is? Mandatory arbitration is when you agree to waive your legal right to sue the business or person providing you with the goods or services you are purchasing. If you have a disagreement after signing the agreement, you are forced to allow a third party to determine (arbitrate) the outcome of the disagreement. But wait, it gets better – for business owners. Some mandatory arbitration clauses force you to use a pre-selected arbitration company – often selected by the business with which you’re signing the agreement. If this sounds like a conflict of interest to you, that’s because it is. For example, tt is common for car dealerships to include mandatory arbitration clauses in new or used car purchase agreements, and even nursing homes include these clauses in their contracts. What is being done about this apparent conflict of interest? Congress is starting to take note, and legislation is being proposed to outlaw or limit mandatory arbitration clauses in consumer and employment contracts. It won’t be an easy fight, but it’s one whose time has come. Tell us what you think – how do you feel about mandatory arbitration clauses?

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