Arbitration Agreement - New Car Purchase
04-02-21, 08:43 PM
#32
Lead Lap
These mandatory arbitration clauses are all over the place. A lot of public companies have these in their bylaws for shareholder lawsuits. I’m sure you have signed off on many of these clauses before but may not have realized it.
04-03-21, 06:42 AM
#33
Lexus Fanatic
So TriC what are you going to do, are you going to not buy a car to avoid signing an arbitration agreement?
04-03-21, 07:33 AM
#34
Racer
Thread Starter
Not all dealers have them or, if they do, require their execution (as earlier described regarding our recent RX 350 purchase).
It also may make a difference to me whether the dealer is local or out of state. In the latter instance, it would be more trouble than it's worth to ever sue. In the former, the only cost is the filing fee.
It also may make a difference to me whether the dealer is local or out of state. In the latter instance, it would be more trouble than it's worth to ever sue. In the former, the only cost is the filing fee.
04-03-21, 07:41 AM
#35
Lexus Fanatic
It begs the question, under what circumstance would you want or need to sue the dealer who sold you the car?
04-03-21, 08:00 AM
#36
Racer
Thread Starter
The one that most readily comes to mind is failure to disclose (such as prior body/paint repair), after being specifically asked if any disclosures need to be made.
To turn the question around - what are dealers so afraid of? In a normal sale, they should have absolutely nothing to fear. If I buy a lawn mower at Lowe's, there's no AA. Heck, my Kubota cost as much as a car and the dealer didn't present an AA. If there's an issue, my recourse is against the manufacturer.
To turn the question around - what are dealers so afraid of? In a normal sale, they should have absolutely nothing to fear. If I buy a lawn mower at Lowe's, there's no AA. Heck, my Kubota cost as much as a car and the dealer didn't present an AA. If there's an issue, my recourse is against the manufacturer.
04-03-21, 08:08 AM
#37
Lexus Champion
They are afraid of frivolous lawsuits that cost a lot of money to defend. Most lawsuits settle because the cost of the settlement is likely cheaper than the cost of litigation, even if you know you will prevail at the end of litigation. Arbitration proceedings are much less involved and much shorter.
Last edited by tex2670; 04-03-21 at 08:23 AM.
04-03-21, 08:15 AM
#38
Lexus Fanatic
To turn the question around - what are dealers so afraid of? In a normal sale, they should have absolutely nothing to fear. If I buy a lawn mower at Lowe's, there's no AA. Heck, my Kubota cost as much as a car and the dealer didn't present an AA. If there's an issue, my recourse is against the manufacturer.
I'll give you one from my own company. We represented a seller (not me but someone else at the company) and that seller chose to overprice the house. A contract came in 25 days later (this is a market where things are selling in 3 days with 15 offers, so that shows you the power of pricing) around where they were told they should list the house, and they accept it. After closing all their friends say "my god how could you do that all the houses are selling way over and you should have had 20 offers etc" now the guy is threatening to sue us. Well guess what? He signed an arbitration agreement and thats why. It protects us from the extremely expensive and time consuming process of handling a lawsuit in the court.
This is why you are seeing this more and more. The company you're doing business with is not always, or even very often the bad guy. You can do everything right and honorably and still get sued, and when you get sued you ALWAYS lose, even if you win the case.
Last edited by SW17LS; 04-03-21 at 08:18 AM.
04-03-21, 08:27 AM
#39
It’s a CYA agreement and is a direct result of the foolish notion that the customer is always right
Litigious societies eventually become intolerable to live in.
it’s a lousy agreement that has to be signed. The dealer sees it as a red flag when someone refuses to sign it as they right or wrongly believe they will have trouble with that customer down the road
it’s just a car. It can be fixed. Buy it if you like the deal. May have to buy used if you don’t want to sign and arbitration agreement.
it’s not a big deal. Losing your right to sue over a new car is no big deal
Litigious societies eventually become intolerable to live in.
it’s a lousy agreement that has to be signed. The dealer sees it as a red flag when someone refuses to sign it as they right or wrongly believe they will have trouble with that customer down the road
it’s just a car. It can be fixed. Buy it if you like the deal. May have to buy used if you don’t want to sign and arbitration agreement.
it’s not a big deal. Losing your right to sue over a new car is no big deal
04-03-21, 08:51 AM
#40
Lexus Fanatic
I bet you used car dealerships have an arbitration agreement too
04-03-21, 09:19 AM
#42
Pole Position
Maybe varies by state but in CA you can still pursue lemon law remedies regardless of whether you signed an arbitration agreement plus the arbitration decision isn’t binding on the consumer, you can still pursue your case through other legal channels if you wish (the arbitration decision may be on the manufacturer). These are all about decelerating the process when a customer has a complaint and ensuring fewer of them progress to the point where some action is necessary.
I do agree that these agreements are problematic. The clauses are buried in standard form contracts of adhesion that the customer can’t modify, they aren’t clearly explained, and are part of a stressful finance office process where the customer cannot possibly read and understand the implications of everything they are required to sign.
The bottom line, though, is if a purchase agreement has one of these clauses, you’re not going to be buying the car unless you sign it. But in many cases it may not really matter. You can still seek remedies if necessary.
I do agree that these agreements are problematic. The clauses are buried in standard form contracts of adhesion that the customer can’t modify, they aren’t clearly explained, and are part of a stressful finance office process where the customer cannot possibly read and understand the implications of everything they are required to sign.
The bottom line, though, is if a purchase agreement has one of these clauses, you’re not going to be buying the car unless you sign it. But in many cases it may not really matter. You can still seek remedies if necessary.
04-03-21, 10:41 AM
#43
Lexus Fanatic
Exactly. You can ALWAYS pursue legal remedies regardless of an arbitration agreement, the judge will decide if the arbitration agreement holds up.
04-03-21, 10:51 AM
#44
Lexus Champion
Maybe varies by state but in CA you can still pursue lemon law remedies regardless of whether you signed an arbitration agreement plus the arbitration decision isn’t binding on the consumer, you can still pursue your case through other legal channels if you wish (the arbitration decision may be on the manufacturer). These are all about decelerating the process when a customer has a complaint and ensuring fewer of them progress to the point where some action is necessary.
I do agree that these agreements are problematic. The clauses are buried in standard form contracts of adhesion that the customer can’t modify, they aren’t clearly explained, and are part of a stressful finance office process where the customer cannot possibly read and understand the implications of everything they are required to sign.
The bottom line, though, is if a purchase agreement has one of these clauses, you’re not going to be buying the car unless you sign it. But in many cases it may not really matter. You can still seek remedies if necessary.
I do agree that these agreements are problematic. The clauses are buried in standard form contracts of adhesion that the customer can’t modify, they aren’t clearly explained, and are part of a stressful finance office process where the customer cannot possibly read and understand the implications of everything they are required to sign.
The bottom line, though, is if a purchase agreement has one of these clauses, you’re not going to be buying the car unless you sign it. But in many cases it may not really matter. You can still seek remedies if necessary.
04-03-21, 11:17 AM
#45
Lexus Fanatic
Thats the other important part. The arbitration clauses are for breach of contract. If you're in a situation where a dealership has committed fraud, there are regulatory bodies that deal with that. You can complain to your state attorney general etc.