ARBITRATION CLAUSE FOUND UNENFORCEABLE IN SERVICE CONTRACT ACTION
Reversing the lower court, the Supreme Court of New Jersey found an arbitration provision in a service contract was unenforceable because it failed to notify the consumer clearly and unambiguously that, by entering into the agreement, the consumer was waiving the right to seek relief in a court of law. In this case, the arbitration clause stated that either party may submit any dispute “to binding arbitration”; that “the parties shall agree on a single arbitrator to resolve the dispute”; and that the arbitrator’s decision “shall be final and may be entered into judgment in any court of competent jurisdiction.” Basing its decision on the principle that an effective waiver requires a party to have full knowledge of his legal rights and intent to surrender those rights, the court found that the arbitration provision at issue failed to explain that the plaintiff was waiving her right to seek relief in court, what arbitration is, or how arbitration is different from a proceeding in a court of law. Patricia Atalese v. U.S. Legal Services Group, A-64-12 (072314) (N.J. Sept. 23, 2014).
This post written by Leonor Lagomasino.
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