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A few days ago I bought over-the-counter goods from a shop. There was no signature involved in this purchase. I walked up to the counter with off-the-shelf items, was asked for a phone number, paid in cash, then left. They just sent a text message claiming that buying anything from them constitutes waiver of right to sue them and consent to binding arbitration. Is the shop violating any law?

The shop was in Ohio, United States of America.

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  • 8
    Is this a brick and mortar shop, or an online shop? Also, arbitration agreements are incredibly common in contracts of adhesion. Unfortunately, these days, I'm often more surprised than not if an agreement with a large company does not include one.
    – Chuu
    May 9 at 13:39
  • The question by Freeman Helmuth is really the crucial issue. A contract of adhesion is still a valid contract, though some states may preclude mandatory arbitration clauses.
    – user6726
    May 9 at 20:26
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    @user6726 in which states does informing someone after the fact that there is a contract of adhesion constitute the formation of a valid contract of adhesion? If such a contract is offered "take it or leave it," doesn't the customer need to be informed of the contract before the purchase so as to have an opportunity to make an informed choice whether to make the purchase?
    – phoog
    May 9 at 21:03
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    t may not be of any help in Ohio but in the UK, where such matters are governed by the Sale of Goods Act, and where goods must be "fit for their intended purpose", a consumer cannot be forced to go to arbitration unless they agree to do so, after differences between the parties have arisen. However a court can direct that a matter be settled by arbitration but only where it considers it not detrimental to the consumer's interest, as against having the matter settled by the court.
    – WS2
    May 10 at 8:56
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    "I am sorry, but using my phone number constitutes waiver of right to contest any issue I have about your products".
    – Florian F
    May 11 at 18:56

5 Answers 5

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Technically speaking, it's not illegal: spontaneously making a false statement to someone does not fall under any of Ohio's laws regarding fraud or the like.

It also doesn't have any legal effect. You can't retroactively change the terms of a deal; if they didn't tell you about an arbitration requirement at the time you made the purchase, there is no arbitration requirement (and the burden of proof here is on them, not you).

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    "spontaneously making a false statement to someone does not fall under any of Ohio's laws regarding fraud or the like": misrepresenting the terms of a consumer transaction, however, does fall under Ohio's consumer protection law.
    – phoog
    May 10 at 0:00
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    @phoog Although true, for whatever reason, the store somehow thinks the sending of the SMS will do anything for them. It doesn't. OP would be in no new situation if the SMS was not sent, so OP is not really in a position to pursue any legal actions. Of course, if situation arises where OP needs to sue said store, then yes, you can bring this into effect, and sue the store.
    – Nelson
    May 10 at 11:34
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    @Nelson if they're engaging in deceptive practices, the state has an interest in making them stop even if OP has no reason to sue them. The deceptive practice, for example, might discourage someone who does have a reason to sue from suing.
    – phoog
    May 10 at 12:27
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    @phoog: Is it still illegal, even after the transaction has been consummated? I would be rather surprised by that, but I could imagine that being the law.
    – Kevin
    May 10 at 15:48
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    @Kevin I don't know the finer points of Ohio consumer protection law, but it's certainly plausible. One of the offenses is misrepresenting the terms of a transaction. Doing so after the transaction is complete could hurt consumers unfairly as I explained above. The law could apply, "on its face," as they say, but whether Ohio has actually sought to apply the law in that way, and whether its courts have accepted that application, I do not know.
    – phoog
    May 10 at 20:01
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They cannot force a contract on you after the fact.

You should leave these numbskulls alone, they are clearly up to something that makes them likely to be sued.

I am adding the following: it's not illegal as far as I know to declare anything you want to a person as long as it isn't a threat. "You are now beholden to give me your firstborn makle child." lol, no.

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    This doesn't answer the question "Is the shop violating the law?" If the purported waiver of the right to sue and agreement to binding arbitration are in fact an attempt to "force a contract on [the buyer] after the fact," is that illegal (perhaps in violation of some consumer protection law) or is it simply without force?
    – phoog
    May 9 at 20:46
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    This answer does not address the question. May 9 at 22:58
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    to be fair, they usually can't force it before the fact either. Other laws still hold true and have effect.
    – Aequitas
    May 11 at 6:13
  • The word "legal" does appear in the Question. Either way, isn't it true that "illegal" isn't really what was meant? Isn't the relevant point here, whether the store's statement could have any effect in law? Anywhere I've heard of, "illegal" broadly means "against the law" or "punishable by law". The difference is subtle, but surely relevant. May 11 at 17:35
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Did you sign anything? If you signed any kind of document the arbitration clause was probably in it and you didn't see it. And yes, it is legal to have a simple "You agree to arbitration" etc type of statement.

A written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract or as otherwise provided in chapter 4.

https://www.law.cornell.edu/uscode/text/9/2

I'm guessing they just sent the text as a reminder.

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    As indicated in the question above, no. May 9 at 22:57
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    The form the phone number was taken on might have such broilerplate. (I've refused to provide such in the past and the store has let it drop in favor of making a sale). May 10 at 5:02
  • As indicated in the question above, no. They asked verbally. May 16 at 18:19
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Just to add another possible scenario to the above answers, it is possible to agree to a contract through conduct other than the more traditional actions such as saying "I agree" or signing a written contract.

For example, the shop could hypothetically have a (prominent and clear) sign at the entrance which says "By purchasing something from this shop, you agree to the following conditions: [...]". This is the mechanism by which for example you agree to pay parking charges when you enter a car park.

As for whether this is illegal, in , this could amount to fraud depending on the intent behind it e.g. if they know that it is false (i.e. that you are not in fact bound by this term) and they intend to dissuade you from taking potential lawsuits. Fraud Act 2006, Sections 2 and 5:

2 Fraud by false representation

(1) A person is in breach of this section if he — (a) dishonestly makes a false representation, and (b) intends, by making the representation - (i) to make a gain for himself or another, or (ii) to cause loss to another or to expose another to a risk of loss.

(2)A representation is false if - (a) it is untrue or misleading, and (b) the person making it knows that it is, or might be, untrue or misleading.

5 (3) “Gain” includes a gain by keeping what one has, as well as a gain by getting what one does not have.

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It is a complicated question. It would be a pretty clear unfair business practices in California, and the similar statute in Ohio per Section 1345.02 (A) (10) which provides that it is an unfair act or practice

"That a consumer transaction involves or does not involve a warranty, a disclaimer of warranties or other rights, remedies, or obligations if the representation is false."

To sue is a pretty clear remedy which is implied and imposed by the operation of law. Now, if they want to deprive you of this "remed[y]", they must state that clearly prior to the transaction.

Hence, post-transaction reneging on a warranty, remedy, obligation or other right is clearly an unfair business practice. This means, the illegal, invalid or unenforceable arbitration "provision" is just that: An illegal, invalid or unenforceable arbitration provision.

This may give a personal cause of action if there is any damage beyond trifle. Say, you fail to meet the statute of limitation as a result of the willful or reckless false statement designed to deceive.

Also, it may, in fact, be a cause of action on the basis of fraud. Even criminal statutes on the construction of "property" in property crimes are much broader than we think of them in everyday life. Say, a right to an appeal, to a PIN code or an administrative complaint may be "property" for the purposes of extortion laws in California (see generally, for e.g., People v. Fisher (2013) 216 Cal.App.4th 212, 217, 156 Cal.Rptr.3d 836). Similarly in California. And it is a distinction without a difference whether or not the conversion of the property (within the meaning of even the generally strictly construed criminal statutes) is brought about by "consent" compelled by fear such as will constitute extortion or "consent" obtained by false premise.

Surrendering, forfeiting or otherwise giving up the right to a statutory remedy as a result of such a deceptive text message should render the right to sue "property" for the purposes of conversion at least in a civil cause of action, and the action a matter of civil fraud.

Now, of course, this would heavily rely on Ohio case law, and possibly would require Ohio courts to look at other states cases to a case on point, but the theory is clear.

Whether or not successful, would depend on the facts. (Was deception succesful? Was any cause of action actually more than mere possibility? etc.)

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