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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: 4.4.2.3 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: 4.4.3.4 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: 4.5.3 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: 4.5.4.3 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: 4.8.3 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