Car Arbitration Clauses Questioned

Article excerpt

A recent practice to include arbitration clauses in car sales contracts has some consumer protection advocates concerned.

The clauses require consumers to submit their claims against car dealers to arbitration instead of bringing an action in court.

However, the validity of these clauses remains to be seen.

In an opinion handed down Aug. 6, James B. Blevin, judge with the Oklahoma Court of Appeals, ruled the arbitration clause in a sales contract between Lynn Hickey Dodge and William E. Neighbors for the purchase of a car was not binding.

The court found the language of the arbitration clause entitled the seller to have the option of seeking arbitration, while requiring the buyer to submit to arbitration. The one-sided nature of the clause rendered it unenforceable.

"Arbitration clauses are beginning to turn up more and more in car sales contracts in Oklahoma," says Tomme Fent, attorney for Neighbors.

Fent worries that consumers with relatively small claims will not be able to obtain legal representation if arbitration is required, because the arbitrator is not required to award attorneys fees to plaintiffs if they prevail.

"If no attorneys fees are awarded as they are under consumer protection laws for cases brought in court, plaintiffs won't have anyone representing them," says Fent.

Patricia Sturtevant, general counsel for the National Association of Consumer Advocates, says arbitration clauses are troublesome. …