NEW JERSEY SUPREME COURT TIGHTENS REQUIREMENTS FOR CONSUMER ARBITRATION AGREEMENTS

On September 23, 2014, the New Jersey Supreme Court in a unanimous decision held that an arbitration clause in a consumer contract was unenforceable because it did not clearly and unambiguously signal to the consumer that she was surrendering her right to pursue her claims in court. The Court was troubled that the arbitration clause did not clearly explain what arbitration is and how it is different from proceeding in a court of law.

The Court stated that no prescribed set of words is required. Notwithstanding the foregoing, the arbitration clause must contain a clear and unambiguous statement that explains that the consumer is giving up his or her right to bring their claims in court or have a jury resolve the dispute. This for obvious reasons will have dramatic impact upon consumer class actions and how they proceed.

As a result, any company that does business in New Jersey and uses arbitration clauses in its contracts should carefully review their agreements. If the agreement does not at a minimum make clear that the consumer is waiving his or her right to bring a lawsuit in court, the provision should be revised. If you have any questions please feel free to call any of the attorneys at Danziger Shapiro. We will be happy to discuss this and any other issue that may be affecting your business.

This entry is presented for informational purposes only and is not intended to constitute legal advice.