Bad Contract JuJu
November 3, 2007 10:18 PM Subscribe
How f*cked am I regarding an arbitration clause in a contract?
A contract I signed had an ARBITRATION OF DISPUTES article in it (should there be any controversy or claim related to the contract.)
This states that an arbitration committee would render judgment etc.
Is this the only option I have or can I hire an attorney and try and solve things via other strategies that the attorney might device?
Or would it be that my only option is to have the attorney present with me before the 'committee.' I've never been involved in a legal wrangling like this and would like to know more about what my rights are.
I'm prepping myself for the worst as I have an appointment scheduled with an attorney next week.
A contract I signed had an ARBITRATION OF DISPUTES article in it (should there be any controversy or claim related to the contract.)
This states that an arbitration committee would render judgment etc.
Is this the only option I have or can I hire an attorney and try and solve things via other strategies that the attorney might device?
Or would it be that my only option is to have the attorney present with me before the 'committee.' I've never been involved in a legal wrangling like this and would like to know more about what my rights are.
I'm prepping myself for the worst as I have an appointment scheduled with an attorney next week.
And where are you? What law is involved?
It's possible that such a clause isn't legally enforceable, but only an attorney familiar with business law in your location could tell you that for sure. You need to talk to one before the meeting.
posted by Steven C. Den Beste at 10:36 PM on November 3, 2007
It's possible that such a clause isn't legally enforceable, but only an attorney familiar with business law in your location could tell you that for sure. You need to talk to one before the meeting.
posted by Steven C. Den Beste at 10:36 PM on November 3, 2007
the only possible out you might have is if you are in CA and you join a class action, preferably as a lead plaintiff.
and your description is woefully inadequate.
posted by Mr_Crazyhorse at 10:58 PM on November 3, 2007
and your description is woefully inadequate.
posted by Mr_Crazyhorse at 10:58 PM on November 3, 2007
Arbitration is not necessarily bad. It is usually cheaper than litigation. You still NEED an attorney and you need to make sure that the arbitrator that is chosen is fair, at least to your interests.
posted by caddis at 11:03 PM on November 3, 2007
posted by caddis at 11:03 PM on November 3, 2007
There are certain factors that can allow a plaintiff to litigate a contract issue in court, even when the contract contains an arbitration clause. For example, if the dispute involves a claim of fraud in the inducement, that issue is not arbitrable in some states. Talk to an attorney.
posted by jayder at 11:12 PM on November 3, 2007
posted by jayder at 11:12 PM on November 3, 2007
If this is a contract through any large company (e.g. cable, cell phone, etc.), you're almost certainly going to lose. The arbitration firms employed (yes, employed) by these corporations rule in their favour over 95% of the time. However, getting a lawyer will still help.
Arbitration is not necessarily bad. It is usually cheaper than litigation. You still NEED an attorney and you need to make sure that the arbitrator that is chosen is fair, at least to your interests.
Arbitration in and of itself isn't bad, but mandatory binding arbitration is. This is almost cetainly what the OP describes and it's beyond bad. There are cases upon cases upon cases demonstrating the unconscionable nature of mandatory binding arbitration. There's pending legislation to make mandatory binding arbitration illegal, but it's hard to say if it will pass with big business lobbying so hard against it. It's great for them, as it effectively removes your ability to pursue any legal recourse for their wrongs. However, it's very, very bad for consumers.
Good luck to the OP- he's probably going to need it.
posted by Nelsormensch at 11:36 PM on November 3, 2007 [1 favorite]
Arbitration is not necessarily bad. It is usually cheaper than litigation. You still NEED an attorney and you need to make sure that the arbitrator that is chosen is fair, at least to your interests.
Arbitration in and of itself isn't bad, but mandatory binding arbitration is. This is almost cetainly what the OP describes and it's beyond bad. There are cases upon cases upon cases demonstrating the unconscionable nature of mandatory binding arbitration. There's pending legislation to make mandatory binding arbitration illegal, but it's hard to say if it will pass with big business lobbying so hard against it. It's great for them, as it effectively removes your ability to pursue any legal recourse for their wrongs. However, it's very, very bad for consumers.
Good luck to the OP- he's probably going to need it.
posted by Nelsormensch at 11:36 PM on November 3, 2007 [1 favorite]
the big company does not get to "choose" to arbitrator. agreeing upon an arbitrator is one of the main steps in any arbitration and why the OP needs a lawyer right up front to help select a fair arbitrator. I am big co. and when I have a dispute with little co. or individual I prefer to have that dispute in court. A few thousand, or even a few million $, it matters not, as long as I can present my case fully. However, if my product hurt you and you want to sell a sob story to the jury to take my $, then I would rather have the less emotional arbitrator.
posted by caddis at 11:45 PM on November 3, 2007
posted by caddis at 11:45 PM on November 3, 2007
Response by poster: You need to give more details: what type of contract in what industry and what exactly does the arb clause say?
It was a contract with the contractor that did a remodel on my house. So it's in the construction industry.
It states "Any controvery or claim arising out of or relating to this contract, or breach therof, shall be settled by arbitration administered by the American Arbitration Assoc. under its Construction Industry Arbitration Rules, and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof."
posted by zenpop at 3:52 AM on November 4, 2007
It was a contract with the contractor that did a remodel on my house. So it's in the construction industry.
It states "Any controvery or claim arising out of or relating to this contract, or breach therof, shall be settled by arbitration administered by the American Arbitration Assoc. under its Construction Industry Arbitration Rules, and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof."
posted by zenpop at 3:52 AM on November 4, 2007
IANAL but I know a little about arbitration.
It's hard to give an answer without knowing more details about the process of choosing an arbitrator, what these Construction Industry Arbitration Rules are, etc. I am almost positive you won't be able to avoid the arbitration-- there is lots of law out there saying that not only are arbitration clauses enforceable, they are preferrable to using the courts. Courts like arbitration because it reduced their workload; it is very rare for a court to invalidate an arbitration clause. However, contrary to what one person said above, arbitration clauses have been struck down when the clause gives one party full power over choosing an arbitrator. (I mean choose the actual arbitrator, not just the firm or the rules by which an arbitrator will be chosen.) If the arbitration is inherently unfair (not because you have less due process but because the cards are fundamentally stacked against you, making it impossible for you to win) it should be struck down and your lawyer will be able to handle that for you.
Arbitration is not so bad in contract cases-- you would get less out of playing on the emotions of a jury anyway. Do you have a contract case?
So to conclude: get a lawyer, one who has dealt with this situation many times before. DO NOT hire someone who is handling an arbitration for the first, second, or even third time. You want them to have seen every trick already. You should expect your lawyer to be with you every step of the way, including preparing a case, negotiating terms of the arbitration/choosing an arbitrator, and presenting the case to the arbitrator. You shouldn't be doing any of this yourself.
Good luck!
posted by ohio at 6:23 AM on November 4, 2007
It's hard to give an answer without knowing more details about the process of choosing an arbitrator, what these Construction Industry Arbitration Rules are, etc. I am almost positive you won't be able to avoid the arbitration-- there is lots of law out there saying that not only are arbitration clauses enforceable, they are preferrable to using the courts. Courts like arbitration because it reduced their workload; it is very rare for a court to invalidate an arbitration clause. However, contrary to what one person said above, arbitration clauses have been struck down when the clause gives one party full power over choosing an arbitrator. (I mean choose the actual arbitrator, not just the firm or the rules by which an arbitrator will be chosen.) If the arbitration is inherently unfair (not because you have less due process but because the cards are fundamentally stacked against you, making it impossible for you to win) it should be struck down and your lawyer will be able to handle that for you.
Arbitration is not so bad in contract cases-- you would get less out of playing on the emotions of a jury anyway. Do you have a contract case?
So to conclude: get a lawyer, one who has dealt with this situation many times before. DO NOT hire someone who is handling an arbitration for the first, second, or even third time. You want them to have seen every trick already. You should expect your lawyer to be with you every step of the way, including preparing a case, negotiating terms of the arbitration/choosing an arbitrator, and presenting the case to the arbitrator. You shouldn't be doing any of this yourself.
Good luck!
posted by ohio at 6:23 AM on November 4, 2007
This doesn't sound so bad. Get a lawyer, and when hiring ask about their experience with arbitration, experience with construction arbitration being a plus.
posted by caddis at 6:28 AM on November 4, 2007
posted by caddis at 6:28 AM on November 4, 2007
The contractor may be using a boiler plate contract covering the legalities in your state without having much more knowledge of the process than the customer. Document everything, write a letter to the contractor detailing the dispute, monies paid, schedules not kept, etc. I don't know how far in the process you are, but I am guessing either the work wasn't completed or wasn't completed on schedule. You have to be prepared to show that your expectations were clear, how the contractor failed, possible remedies offered (more time, discount, redo) that were tried, etc. Full documentation in writing will help you later with the case and if you are offering (or have offered) the contractor the opportunity to meet your specifications you will look more like a reasonable customer with a legitimate complaint rather than a nitpicker who did not communicate the expectations clearly and gave no opportunity to the contractor to fix his/her mistake. In all fairness, a contractor/remodeler should be given the opportunity to meet your expectations prior to a legal action. Your home is an emotional place for you and you might be freaking out about something prematurely that can be fixed without resorting to legal action.
Also--filing a preliminary complaint with the BBB might give you insight into their defense if you don't know it already. They will answer the BBB and you will see what their side of the argument is on the issue, and that will give you some information you might not have had to counteract their defense when you meet with the arbitrator.
posted by 45moore45 at 6:48 AM on November 4, 2007
Also--filing a preliminary complaint with the BBB might give you insight into their defense if you don't know it already. They will answer the BBB and you will see what their side of the argument is on the issue, and that will give you some information you might not have had to counteract their defense when you meet with the arbitrator.
posted by 45moore45 at 6:48 AM on November 4, 2007
Response by poster: My complaint is really quick and simple, 45moore45 -- as the house project was finishing up the contractor came to me with a higher figure than we'd originally discussed -- this new amount, he promised, would completely finish the house.
I agreed to that, had to get a loan to pull the money together, and then stupidly requested that a "gentlemen's agreement" be in place between us honoring that that amount of money would, indeed, complete the house.
With a small amount of money still owed to the contractor (I paid him 90% of that 'agreed upon figure' he then informed me that the agreed upon amount was now NOT going to be enough.
BUT he told me this after the fact of another (he claims) 28 thousand dollars worth of work and materials were done and used. In other words he never told me "Well, you know what, that agreement we had is actually not going to cover things." Which prevented me from being able to say "STOP I can't pay anymore", etc.
That's when I snapped and started making calls to find an attorney.
posted by zenpop at 9:20 AM on November 4, 2007
I agreed to that, had to get a loan to pull the money together, and then stupidly requested that a "gentlemen's agreement" be in place between us honoring that that amount of money would, indeed, complete the house.
With a small amount of money still owed to the contractor (I paid him 90% of that 'agreed upon figure' he then informed me that the agreed upon amount was now NOT going to be enough.
BUT he told me this after the fact of another (he claims) 28 thousand dollars worth of work and materials were done and used. In other words he never told me "Well, you know what, that agreement we had is actually not going to cover things." Which prevented me from being able to say "STOP I can't pay anymore", etc.
That's when I snapped and started making calls to find an attorney.
posted by zenpop at 9:20 AM on November 4, 2007
You should download the construction industry arbitration rules and read them just to get familiar. Arb can expensive but the price you pay depends on the amount you're seeking.
Try www.hadd.org - it's about mandatory binding arb in the home building industry. It's hard to pick a "fair" arbitrator because a lot of the cases and awards are sealed/secret and subject to nondisclosure agreements.
Someone mentioned the Arbitration Fairness Act of 2007 - it would prohibit mandatory pre-dispute binding arb in consumer contracts. Write to your congressperson if you want your right to a jury trial back.
posted by KimikoPi at 10:32 PM on November 4, 2007
Try www.hadd.org - it's about mandatory binding arb in the home building industry. It's hard to pick a "fair" arbitrator because a lot of the cases and awards are sealed/secret and subject to nondisclosure agreements.
Someone mentioned the Arbitration Fairness Act of 2007 - it would prohibit mandatory pre-dispute binding arb in consumer contracts. Write to your congressperson if you want your right to a jury trial back.
posted by KimikoPi at 10:32 PM on November 4, 2007
Arbitration clauses can be beat. I have beat some pretty "ironclad" ones in my practice and got before a judge (which is where any attorney worth his/her salt would prefer to be). But to beat it you need a very smart attorney and helpful facts. I'd be very suspicious of an attorney who says you are stuck in arbitration upon initial review.
I can spot several things in the very limited description you have given that I would look at myself to get to court. So make sure you find an attorney who will actually think through the issue instead of giving you a flat-out answer.
Unless the first attorney you meet knocks your socks off with brilliance, keep looking until you find one that does.
posted by dios at 10:56 AM on November 7, 2007
I can spot several things in the very limited description you have given that I would look at myself to get to court. So make sure you find an attorney who will actually think through the issue instead of giving you a flat-out answer.
Unless the first attorney you meet knocks your socks off with brilliance, keep looking until you find one that does.
posted by dios at 10:56 AM on November 7, 2007
This thread is closed to new comments.
posted by KimikoPi at 10:23 PM on November 3, 2007