Making Your Arbitration Clause Legit...

One of the frequent complaints about arbitration is the contractual clause itself. Is the clause valid? Was it agreed to knowingly? Or, at a minimum, with a reasonable chance of it being agreed to knowingly?

The creation of an arbitration clause should be a simple enough endeavor. The American Arbitration Association makes its Clause Builder Tool available to the public and it’s a wonderfully good tool.

But how an arbitration clause is utilized in the deal making process is just as important. As noted in the Cincinnati Enquirer recently, if the arbitration clause is buried in the fine print, a court is not likely to uphold it. “First, as the court noted, the contract terms were barely legible, much less conspicuous. The notice was printed in a tiny grey font and the hyperlink was not set off in a different color. It was merely underlined. This was coupled with brightly colored graphics that drew the user’s attention away from the terms.”

The user cannot be assumed to have agreed to the arbitration clause just because it clicked on an ambiguous button. “In [the Court’s] view, pushing a button manifests assent only if the user is explicitly advised that doing so manifests consent to the terms. Here, the consumers received no such notification. The better practice is to have the consumer push a button that says “by pushing this button, I assent to the terms and conditions.”

When contracting to have arbitration as a dispute resolution process, it is best to have a great arbitration clause and to avoid duping the other side into agreeing upon it.