1

Suppose a consumer signs contract of adhesion with corporation. Corporation represents that the contract will be available online at any time. Consumer doesn't make a copy, based on that representation.

Several years pass. Contract is not available online. Consumer, not in possession of the contract, proceeds to arbitration over a dispute, assuming arbitration is forced. Shortly before the hearing, after consumer has spent significant time and money, corporation discloses the contract -- no mandatory arbitration provision exists.

Is the corporation liable for the consumer's wasted time?


EDIT:

From @ohwilleke's answer:

In practice, this fact pattern is unlikely, because the consumer needs the relevant details from the contract to commence arbitration.

Rule R-12 of the AAA Consumer Rules, which is oftentimes expressly incorporated into consumer contracts, requires that the business register arbitration agreements in a public registry.

Say a large corporation has many different contracts containing arbitration clauses with materially different terms (e.g. choice-of-law), or perhaps no clause at all, and has registered those clauses in a misleading way, or failed to register some of them over time -- a consumer could easily file for arbitration with the wrong clause.

Concrete example: Some businesses have a pre-purchase contract and multiple post-purchase contracts (e.g. a clickwrap paperless billing contract). Those contracts are oftentimes not updated in lock-step, leading to conflicting terms.

2
  • In what way did consumer spend time and money prior to the hearing?
    – user6726
    Jun 25, 2021 at 18:33
  • Legal research, discovery, brief, pleading, etc. The equivalent of trial prep. Jun 25, 2021 at 22:37

1 Answer 1

3

No.

Arbitrating rather than litigating when not required to do so by contract is almost never considered to be a legally compensable harm as a result of pro-arbitration legal policies. The consumer would be required to continue arbitrating and couldn't change course at that point.

In practice, this fact pattern is unlikely, because the consumer needs the relevant details from the contract to commence arbitration.

Other examples of unavailable contracts are hard to compare. It is a fact intense analysis.

4
  • Question edited to add a couple examples. Jun 25, 2021 at 23:43
  • @JoshJohnson The examples provided don't change the result or the analysis. The impact of a non-arbitration issue might be resolved differently. For example, if the contract said notice must be by certified mail to a specific address to exercise a right (e.g. a free warranty extension), and notice was given to a different address by first class mail that was actually received by the business, not making the contract terms available might excuse that failure on the part of the consumer to comply strictly with the notice requirement.
    – ohwilleke
    Jun 25, 2021 at 23:46
  • Does your analysis change if the real contract is revealed prior to the close of the hearing, and the arbitrator declines to continue on the grounds that the claim is not arbitrable (e.g. the real terms are unconscionable, but the imposter terms were not)? Jun 26, 2021 at 0:03
  • 1
    @JoshJohnson The arbitrator isn't going to discontinue arbitration proceedings at that point. The arbitrator might rule in favor of the consumer on the merits of the disputed points.
    – ohwilleke
    Jun 28, 2021 at 23:44

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.