arbitration

The plaintiffs, Walker Bark and Debra Yahquo, signed two contracts with Lake Country Chevrolet to purchase automobiles. A disagreement arose over the vehicles. Unable to resolve the dispute to their satisfaction, the plaintiffs filed a lawsuit. They asked the court to rescind (set aside) the contracts and to recover damages for fraud by the car dealer. The car dealership filed a motion to compel arbitration to avoid litigation in court. Further, the dealership argued that the contracts signed by the plaintiffs said any disputes were to be determined through arbitration, not a lawsuit.

The plaintiffs responded asserting that Mr. Bark suffered from a service-related disability and cognitive impairment.  Because of this, he did not knowingly agree to any of the terms of the contract including the arbitration clause. As an alternative, the plaintiffs requested the court hold a hearing where it could hear evidence on the issue of whether cognitive impairment existed and the affect, if any, it had on the plaintiffs’ ability to comprehend the contract. However, the trial court refused to hold a hearing or hear evidence.  Instead, the court denied the dealership’s motion and allowed the lawsuit to proceed.

arbitration2As a result, the dealership appealed the decision. The appellate court reversed the ruling of the trial court and remanded the case back to the trial court with instructions that it conduct an evidentiary hearing. As part of this hearing, the trial court was instructed to make a determination as to the existence of the Plaintiffs’ mental capacity and ability to knowingly enter into a contract and agree to arbitration.

Bark v. Lake Country Chevrolet Cadillac, LLC, 2014 OK CIV APP 24, 321 P.3d 1007.

Arbitration clauses are present in many contracts as a means to resolve disputes.

Legal scholars disagree over the advantages/disadvantages of arbitration. For businesses, one benefit can be the confidentiality of the proceeding and the absence of any public proceedings that other customers might discover. However, a disadvantage is that the courts are provided at taxpayer expense to everyone. In arbitration, the participants are actually paying for the services of a private decision maker. The courts will generally require arbitration if it appears the parties to the contract agreed to do so.

If you have questions about a contract, arbitration, or you need legal assistance with another legal problem, maybe we can help you. Contact us now!