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Unfair and Deceptive Acts and Practices: 11.2.6 Statute of Limitations Issues in Multi-State Actions
In a class action that makes claims under several states’ UDAP statutes, the court may be required to decide which state’s timeliness rules to apply.
Consumer Arbitration Agreements: 4.3.8.1 Duress, Lack of Capacity, and Mistake
Section 2 of the FAA states that arbitration clauses are enforceable “save upon such grounds as exist at law or in equity for the revocation of any contract.”114 Any grounds to revoke a contract will apply if appropriate.
Consumer Arbitration Agreements: 4.3.8.2 Unconscionability in Contract Formation
Unconscionability in the formation of an agreement is another possible contract defense.
Consumer Arbitration Agreements: 4.4.1 Overview
Other than express assent, a party’s assent to a contract may be implied, as manifested through conduct that is consistent with an agreement to be bound by contractual terms. Before finding implied assent, two conditions must be satisfied. First, there must be sufficient evidence that the offer was communicated; that the party was adequately notified of the terms of the agreement. Second, the party must have taken action that is sufficient to indicate assent. The burden is on the party seeking to enforce arbitration to show that the term was communicated and accepted.
Consumer Arbitration Agreements: 4.4.2.1 General
Implied assent does not apply unless the party attempting to enforce the arbitration clause demonstrates that the other party received actual or constructive notice of the arbitration clause.128 Courts look at two factors when determining whether notice was sufficient: whether notice of the arbitration clause was delivered to the consumer or worker, and whether the nature of the notice was sufficient to make an average person aware that they would become bound by the clause through the conduct alleged to constitute assent.
Consumer Arbitration Agreements: 4.4.2.2 Notice Must Be Delivered
The mere “availability” of an arbitration clause on a website is insufficient to prove that the consumer had sufficient notice of the clause.131
Consumer Arbitration Agreements: 4.4.2.3 Proof of Notice’s Delivery
When the consumer or worker resisting arbitration alleges never having received notice of an arbitration requirement, the party seeking to enforce the arbitration agreement based on implied assent bears the burden of proving sufficient delivery of notice of the arbitration terms.141 When the facts are in dispute, the worker or consumer may be entitled to a jury trial.142
Consumer Arbitration Agreements: 4.4.2.4 Notice Must Be Conspicuous
The party seeking to enforce an arbitration clause must demonstrate not only that the notice was received, but that the form of the notice was sufficient to make an average person aware that they would become bound by the clause.158 While notice sent via email is not necessarily ineffective, courts have refused to enforce arbitration agreements imposed via email when the arbitration clause was downplayed or easy to miss.159
Consumer Arbitration Agreements: 4.4.3.1 General
Even if the party seeking to enforce arbitration can demonstrate that the offer of arbitration was received, there is no assent unless the other party signifies acceptance. The question of what type of action (or inaction) is sufficient to manifest assent must be resolved on a fact-specific basis.
Consumer Arbitration Agreements: 4.4.3.2 Continued Use of Card or Continued Employment
In some states arbitration clauses imposed unilaterally on card holders through the sending of bill stuffers are invalid as a matter of law, regardless of whether the card holder continued to use the card.172 As one federal court analyzed the situation, under the general law of contracts “an offeror has no power to cause the silence of the offeree to operate as an acceptance when the offeree does not intend it to do so.”173
Consumer Arbitration Agreements: 4.4.3.3 When Consumer No Longer Uses Credit Card
Some arbitration clauses found in credit card bill stuffers by their own terms apply only to card holders who continue to use the credit card after a certain date.176 Even if the clause does not specifically so provide, card issuers often argue that the consumer’s continued use of a credit card indicates assent.177
Consumer Arbitration Agreements: 4.4.3.4 Contract Performance As Acceptance
Performance under the contract can manifest intent to be bound by its terms.183 Courts have enforced arbitration clauses contained in nursing home admission contracts, despite the failure of a nursing home representative to sign the admission contract, when the nursing home indicated its assent by admitting the resident and performing the contract terms.184 In a case in which this doctrine bound the business, the Alabama Supreme Court found that the business accepted an amendment sharply limitin
Consumer Arbitration Agreements: 4.5.1 Introduction
There are different scenarios when an arbitration clause may be communicated to the consumer only after the consumer is irrevocably bound to the transaction, making the arbitration agreement suspect.
Consumer Arbitration Agreements: 4.5.2 Arbitration Clause Unilaterally Sent After Agreement Is Consummated
When the company sends the consumer the arbitration clause after a transaction is consummated, the arbitration clause should not be enforceable. An arbitration clause is a material term that cannot be unilaterally added by one party after both parties have agreed upon terms for a binding contract unless the original contract so specifies.187
Consumer Arbitration Agreements: 4.5.3 Company Delivers Product But Claims Transaction Not Final
Sellers often argue that an arbitration agreement has been formed when a product is delivered to the consumer and there is a notice that the purchase is not final unless the consumer accepts the terms of the purchase included inside the product’s box. The sellers characterize the transaction as unconsummated until the buyer reviews the product and the terms of the sale, and accepts the product. The sellers argue that, if the terms are not agreeable, the consumer should return the product.
Consumer Arbitration Agreements: 4.5.4.1 Change-in-Terms Provisions Do Not Allow the Addition of an Arbitration Clause
Credit card agreements may contain a provision allowing the card issuer to change the terms of the agreement (but not to add a new term): for example, to increase the interest rate or other fees over time. Card issuers use such provisions to justify sending consumers an arbitration agreement as part of a bill stuffer, arguing that the arbitration agreement is just another change in terms.
Consumer Arbitration Agreements: 4.5.4.2 Contracts Permitting Issuers to Add New Terms
To evade the holdings that change-in-terms provisions do not authorize the addition of an arbitration clause, credit card issuers have rewritten their change-in-terms provisions to purportedly authorize the lender to add new terms to the contract, not just to change existing terms.
Consumer Arbitration Agreements: 4.5.4.3 Delaware Statute Seeks to Allow Addition of New Terms
A Delaware statute attempts to make any added or changed terms found in a bill stuffer binding.214 The statute states that banks can amend their agreements “in any respect” whether the change was originally contemplated by the parties or is integral to their relationship, as long as the agreement does not otherwise provide. New terms may be added. It explicitly allows the addition of an arbitration requirement or “other matters of any kind whatsoever.”
Consumer Arbitration Agreements: 4.7 Mutuality and the Requirement of Consideration
When an arbitration requirement is imposed on the consumer or worker but not on the contracting business, there are two grounds to challenge that requirement. This section considers whether the lack of mutuality destroys the required consideration for the agreement.
Consumer Arbitration Agreements: 4.8.1 When Contract Merely Refers to an Arbitration Requirement
Because arbitration is a matter of consent, when the language of an arbitration clause does not actually require workers or consumers to submit their claims to arbitration, courts will not compel arbitration.247 Language in a contract referring to an arbitration agreement cannot take the place of an arbitration agreement itself.
Consumer Arbitration Agreements: 4.8.2 Agreement Must Be Clear and Unmistakable
It is not enough that there be an explicit agreement to arbitrate disputes. The agreement must be clear and unmistakable.
Consumer Arbitration Agreements: 4.8.3 Conflicting, Missing, or Ambiguous Terms in the Agreement
Even if arbitration clauses clearly require binding arbitration, the terms and procedures under which arbitration must proceed must be sufficiently clear. If the consumer agrees to multiple arbitration clauses that conflict with each other, none of the arbitration requirements may be enforceable. A court has refused to enforce any of the arbitration provisions found in three different documents when the arbitration language was confusing and inconsistent from document to document.
Consumer Arbitration Agreements: 4.9.1 General
As described in § 4.8.2, supra, many courts hold that arbitration agreements must be clear and unmistakable. Related to this requirement is a generally applicable state law doctrine that provides that a party does not waive a constitutional or statutory right unless that waiver is made knowingly and voluntarily.269
Consumer Arbitration Agreements: 4.9.2 The Doctrine and FAA Preemption
Parties attempting to enforce arbitration agreements often argue that the FAA preempts state law that might apply the knowing and voluntary waiver standard to arbitration clauses.278 But the FAA only preempts state laws that single out arbitration clauses for discriminatory treatment; it does not preempt generally applicable state law contract doctrines.279 The doctrine that waivers of constitutional rights must be knowing and voluntary is not aimed specifically against arbitration clauses, but