Anyone sign an "Agreement to arbitrate form" when buying your car?
09-04-2015, 05:49 PM
#1
Melting Slicks
Thread Starter
Anyone sign an "Agreement to arbitrate form" when buying your car?
If so would you explain it in simpler language?
My head hurts from reading the form.
My head hurts from reading the form.
09-04-2015, 06:05 PM
#2
Safety Car
Almost every sales contract these days includes an arbitration clause. Basically, what it means is that if you have a disagreement with the dealer you agree to submit your case to an independent arbitrator instead of suing them. Generally, these clauses require you to accept the decision of the arbitrator, and give up your right to sue.
Depending on the contract, the dealer might get to pick the arbitrator, or possibly the arbitrator is one you both agree to. Since the dealer provided the contract, I would bet they get to pick the arbitrator. If you haven't signed yet, you can always try amending it to say the YOU get to pick the arbitrator. Or you could refuse to sign it, and see how desperate the dealer is to sell you a car.
Depending on the contract, the dealer might get to pick the arbitrator, or possibly the arbitrator is one you both agree to. Since the dealer provided the contract, I would bet they get to pick the arbitrator. If you haven't signed yet, you can always try amending it to say the YOU get to pick the arbitrator. Or you could refuse to sign it, and see how desperate the dealer is to sell you a car.
09-04-2015, 06:06 PM
#3
Drifting
basically says you agree to present your grievances before an arbitrator (chosen and paid for by GM/dealer) to settle any claims you may have against them prior to filing legal action through the court system and seeking relief for your claim there.
09-04-2015, 06:12 PM
#5
Melting Slicks
Thread Starter
If a person is not happy with the decision of the arbitrator can he then sue the dealership or GM?
If the dealership is not happy with the decision of the arbitrator can they appeal through the courts?
09-04-2015, 10:45 PM
#6
Drifting
Arbitration is nothing more than a private judge or judges deciding a case instead of a government court. This is supposed to be shorter, simpler, and less expensive than a regular lawsuit, but isn't always. Technically, all parties voluntarily agree to this in advance, but really, the business won't do the deal at all unless you sign an arb agreement, so it's go big or go home. In short, no worries mate; 99% of the time, you won't be any worse off if you cave to the Man.
Once everybody has signed the arb agreement (usually a separate document in a car deal, but can be buried in 20 pages of 8-point type), then anybody who signed it can either start an arbitration claim through whatever organization is named in the arbitration agreement, or if another signatory has already filed a regular lawsuit, have the judge order the lawsuit stayed while arbitration goes ahead. If everybody decides they'd rather be in regular court, then the arb agreement is beside the point, but do be advised that arb agreements can be invoked very late in a court case, usually after somebody thinks they're losing and would like a do-over.
Arbitration is good news/bad news for customers. The bad news is that most arbitrators are very experienced and well-to-do corporate lawyers, and are biased toward businesses, and often the arb agreement specifies that nobody can appeal the decision. Then again anyway, most judges decide most cases in businesses' favor, and most courts of appeals affirm most trial-level judges' decisions.
The good news is, especially if the agreement says either side can pick the American Arbitration Association as the forum, then the rules are similar to but simpler than any set of civil procedure rules I've ever seen, so competent civil litigators will have no problem running your case. There's not as much paperwork and what we call "motion practice" trying to get preliminary rulings on points of law of the sort that can jam courts up for months or years, and the rules of evidence are slim to none, so you can use all kinds of documents and hearsay testimony without the Simon Sez authentication process you'd need before a jury.
Better yet, AAA figured out a few years ago that businesses have all the money, so they charge consumers only $200 to file a claim, but they charge businesses fees totaling over $4,000 to defend it. If the arb agreement gives either side a right to appeal to a three-arbitrator panel, make that $7,000. Plus the $5,000+ to pay their own lawyer(s). And that's if the business WINS. If YOU win, then you go to a regular court with jurisdiction over the business, file a simple motion to confirm your arb award, and collect it like a regular judgment (hope they haven't moved all their money to the Cayman Islands).
So unless you have some huge amount at stake, or if you're facing a company that's just plain crazy and doesn't care if it takes five figs to beat little people into submission, you have a lot of settlement leverage. "Now see here, Mr. Gigantic Car Dealer, do you really want to drop twelve grand no matter what and possibly lose without appeal, or wouldn't you rather, mmm, write us a four-figure check, or take the car back and refund our deposit, or pull some warranty strings and swap out the engine, etc., all very quietly?"
If you really don't want to sign the arb agreement, then you can refuse the deal altogether and find a dealer that doesn't require arbitration, or see if you can convince the dealer that you're really a sweet person and won't make any trouble so it's safe for them to skip the arb agreement this one time.
Very, very difficult. Only if you get a written decision that completely didn't follow the law at all whatsoever, or if you find out later that the arbitrator was fornicating with the other lawyer, or a very few other incredibly messed-up scenarios, could you get a court to set aside an arbitration award. Since most arbitrations (and court cases) go in businesses' favor, you're hosed at this point, and wishing you hadn't signed that stupid arb agreement.
Aha! But if you win an arb award, then it's the business that's now hanging by a thread. They can try to fight your arb award confirmation when you file it with the courts, which can take a year or two, hoping to grind you into a low settlement. If you can wait them out, you'll most likely get your judgment in the end, and if the arb agreement or other contract specifies, maybe your attorney fees. More settlement leverage!
All this is to say, signing an arb agreement isn't a deal-breaker to me, but if something does happen that you'd normally go to court over, be prepared for a somewhat different world than regular court.
Once everybody has signed the arb agreement (usually a separate document in a car deal, but can be buried in 20 pages of 8-point type), then anybody who signed it can either start an arbitration claim through whatever organization is named in the arbitration agreement, or if another signatory has already filed a regular lawsuit, have the judge order the lawsuit stayed while arbitration goes ahead. If everybody decides they'd rather be in regular court, then the arb agreement is beside the point, but do be advised that arb agreements can be invoked very late in a court case, usually after somebody thinks they're losing and would like a do-over.
Arbitration is good news/bad news for customers. The bad news is that most arbitrators are very experienced and well-to-do corporate lawyers, and are biased toward businesses, and often the arb agreement specifies that nobody can appeal the decision. Then again anyway, most judges decide most cases in businesses' favor, and most courts of appeals affirm most trial-level judges' decisions.
The good news is, especially if the agreement says either side can pick the American Arbitration Association as the forum, then the rules are similar to but simpler than any set of civil procedure rules I've ever seen, so competent civil litigators will have no problem running your case. There's not as much paperwork and what we call "motion practice" trying to get preliminary rulings on points of law of the sort that can jam courts up for months or years, and the rules of evidence are slim to none, so you can use all kinds of documents and hearsay testimony without the Simon Sez authentication process you'd need before a jury.
Better yet, AAA figured out a few years ago that businesses have all the money, so they charge consumers only $200 to file a claim, but they charge businesses fees totaling over $4,000 to defend it. If the arb agreement gives either side a right to appeal to a three-arbitrator panel, make that $7,000. Plus the $5,000+ to pay their own lawyer(s). And that's if the business WINS. If YOU win, then you go to a regular court with jurisdiction over the business, file a simple motion to confirm your arb award, and collect it like a regular judgment (hope they haven't moved all their money to the Cayman Islands).
So unless you have some huge amount at stake, or if you're facing a company that's just plain crazy and doesn't care if it takes five figs to beat little people into submission, you have a lot of settlement leverage. "Now see here, Mr. Gigantic Car Dealer, do you really want to drop twelve grand no matter what and possibly lose without appeal, or wouldn't you rather, mmm, write us a four-figure check, or take the car back and refund our deposit, or pull some warranty strings and swap out the engine, etc., all very quietly?"
If you really don't want to sign the arb agreement, then you can refuse the deal altogether and find a dealer that doesn't require arbitration, or see if you can convince the dealer that you're really a sweet person and won't make any trouble so it's safe for them to skip the arb agreement this one time.
If the dealership is not happy with the decision of the arbitrator can they appeal through the courts?
All this is to say, signing an arb agreement isn't a deal-breaker to me, but if something does happen that you'd normally go to court over, be prepared for a somewhat different world than regular court.
09-04-2015, 11:02 PM
#7
Safety Car
That all depends on the terms of the specific contract. You could be signing away your right to sue. No way to answer the question without reading the actual contract, and maybe without having a lawyer read it.
09-05-2015, 10:39 AM
#8
The above comments that most court decisions "go in favor of the business" is a bit of a misstatement. The decisions are likely reasonably fair from a legal point of view given the contract you signed. The problem is that the contract people typically sign is very one-sided and air-tight to start with. They paid good money for a bunch of lawyers with experience litigating these things to write it that way.
If you actually go back and read it in detail, you will likely feel like a fool when you see how one sided it is. But they leverage you into signing it with very little time to review it, and right at the most emotional point in the purchase process, moments before they are going to hand you the keys to your new dream car. So everybody just signs it.
A smart lawyer once explained to me why arbitration agreements are good for the seller of a car or house. Once they have your money or a commitment from your bank, nothing ever goes wrong with that. They get cash up front. But cars, houses, they can have hidden or latent defects. And warranties and service agreements are promises of future performance that can go wrong as well. Or the buyer just changes their mind and wants to make trouble trying to undo the deal. So arbitration makes it as inexpensive as possible for them to enforce the contract as written. Compared to defending a full blown lawsuit, a few thousand dollars is peanuts.
As one poster mentioned, the fee arrangements the arbitrator may charge them may give you a little leverage, but it isn't going to going to be on the order of a whole new car or anything.
If you have signed an arbitration agreement, don't waste your money going to court. A common tactic they may employee is to sit back and let you foolishly waste your money and energy on the court process, knowing the whole time you can never win there. After you expend your war chest on the fruitless court process, and can never recover those wasted funds, your enthusiasm and funding for further litigation in front of the arbitrator will be greatly diminished.
Best to go into such a purchase with the mindset that you give them the money, they give you the car. No backs. Anything more that you can negotiate out of them later is gravy.
If you actually go back and read it in detail, you will likely feel like a fool when you see how one sided it is. But they leverage you into signing it with very little time to review it, and right at the most emotional point in the purchase process, moments before they are going to hand you the keys to your new dream car. So everybody just signs it.
A smart lawyer once explained to me why arbitration agreements are good for the seller of a car or house. Once they have your money or a commitment from your bank, nothing ever goes wrong with that. They get cash up front. But cars, houses, they can have hidden or latent defects. And warranties and service agreements are promises of future performance that can go wrong as well. Or the buyer just changes their mind and wants to make trouble trying to undo the deal. So arbitration makes it as inexpensive as possible for them to enforce the contract as written. Compared to defending a full blown lawsuit, a few thousand dollars is peanuts.
As one poster mentioned, the fee arrangements the arbitrator may charge them may give you a little leverage, but it isn't going to going to be on the order of a whole new car or anything.
If you have signed an arbitration agreement, don't waste your money going to court. A common tactic they may employee is to sit back and let you foolishly waste your money and energy on the court process, knowing the whole time you can never win there. After you expend your war chest on the fruitless court process, and can never recover those wasted funds, your enthusiasm and funding for further litigation in front of the arbitrator will be greatly diminished.
Best to go into such a purchase with the mindset that you give them the money, they give you the car. No backs. Anything more that you can negotiate out of them later is gravy.
09-06-2015, 03:09 PM
#9
Melting Slicks
In any business you conduct, the sudden appearance of a mandatory binding arbitration agreement at the last minute is quite simply a cautionary warning. It is reminding you of the importance of dealing with quality individuals and quality organizations.
A high quality surgeon will do it because he or she wants to avoid expensive and prolonged litigation in the unlikely event something goes wrong and/or the patient in question might be unreasonably litigious.
On the other hand, a schmuck surgeon will do it because he or she knows the sub standard quality of the service they often provide. And yes, in the surgeon examples, the malpractice insurance company will demand an optimally worded agreement be executed prior to every procedure, major or minor.
But, whether the arbitration agreement is drafted on behalf of a surgeon or a car dealer, the question being asked of the consumer is, "Did you do your homework? Did you check consumer agencies, BBB, or even Yelp prior to putting yourself in this position?
If you did, chances are that signing the agreement is no big deal. If not, caveat emptor may potentially apply in spades down the road.
A high quality surgeon will do it because he or she wants to avoid expensive and prolonged litigation in the unlikely event something goes wrong and/or the patient in question might be unreasonably litigious.
On the other hand, a schmuck surgeon will do it because he or she knows the sub standard quality of the service they often provide. And yes, in the surgeon examples, the malpractice insurance company will demand an optimally worded agreement be executed prior to every procedure, major or minor.
But, whether the arbitration agreement is drafted on behalf of a surgeon or a car dealer, the question being asked of the consumer is, "Did you do your homework? Did you check consumer agencies, BBB, or even Yelp prior to putting yourself in this position?
If you did, chances are that signing the agreement is no big deal. If not, caveat emptor may potentially apply in spades down the road.