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Are Arbitration Clauses Enforceable?

Arbitration clauses are everywhere these days. It seems that almost every document, contract, lease, and credit account has an arbitration clause in it. Arbitration clauses typically require people to use specific arbitration methods rather than going to court when disagreements occur. These clauses are appearing in every contract, including in nursing home agreements. Many people wonder if these clauses are enforceable.

Mandatory Arbitration

Mandatory arbitration stipulates that if a dispute arises, the person is not allowed to utilize the United States legal system, and must instead resolve the situation through arbitration. Further, many of these clauses require arbitration through a specific company or group. These clauses are embedded in the small print of just about every contract you sign.

Class Action Suits

In addition, these types of arbitration clauses specifically specify deny people the ability to participate in class action lawsuits. The companies that include arbitration clauses are, effectively, keeping people from their rights under the law. Consumers have no alternative but to sign the agreements, yet by doing so, they are signing away their rights to legally resolve disputes. The clauses are clearly only protecting the companies, and are not helpful to consumers.

New Rules

The Consumer Financial Protection Bureau has recently presented new rules that would restore the right to sue banks. While the new rules are not yet in place, it is hoped that they will be effective in the near future. Once in place, the new rules pave the way for other types of contracts to remove or revise arbitration clauses as well. The changes would not take effect on any contracts that were previously in place, prior to the new rules.

Utilizing the Legal System

Getting rid of mandatory arbitration clauses is a positive change for consumers. People will again be able to take their cases to court, where they can be properly and fairly litigated. The new rules will open up the legal system again, for those who need to resolve disputes. Currently, few people use the arbitration system for minor issues that are less than $2,500. The change will make it easier to take these matters to court, and will help consumers better fight their battles. At the same time, the rules will cause banks, and others who currently use arbitration clauses, to treat customers more fairly. They may need to try to resolve more issues before they head to court.

Nursing Homes

The new rules that are being proposed are specifically for banks, however, rules for other types of businesses will not be far behind. Contracts that force people into mandatory arbitration are certainly biased in favor of the companies who provide them. Consumers need to have their legal rights restored, making it easier for them to seek justice through the legal court system. Even small issues may be able to be better resolved once the new rules are in place. In the meantime, victims of nursing home abuse or neglect should continue to seek help from a qualified attorney. Contact the experienced legal team at Levin & Perconti to discuss your case.

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