Breaking News From NJ: Contracts Require Consent

A colleague has brought to our attention the October 26, 2015 opinion of the Superior Court of New Jersey Appellate Division in Barr v. Bishop Rosen & Co., Inc., which affirmed the denial of a motion to arbitrate on the ground that the arbitration agreement gave an employee insufficient notice that agreeing to arbitration meant waiving the right to sue.

Walking right into a concern that many of us have expressed, the court held that “an agreement to arbitrate must the the product of mutual assent, as determined under customary principles of contract law,” and that “mutual assent requires that the parties understand the terms of their agreement.”  That very proposition seems to run counter to broadly accepted practices in arbitration “agreements” in a consumer and employment context that have regularly been upheld.  In a prior post we noted that consumer arbitration “agreements” are regularly upheld despite the consumer party (a) not knowing they entered into an arbitration agreement, (b) not knowing what arbitration is, and in particular (c) not knowing that an arbitration agreement constitutes a waiver of a right of access to a court.

In New Jersey, an arbitration agreement must include language that “at least in some general and sufficiently broad way” serves to “clearly and unambiguously signal to parties that they are surrendering their right to pursue a judicial remedy.”  Examples of acceptable language include “Instead of suing in court, we each agree to settle disputes only by arbitration” or “The parties agree to waive their right to a jury trial.”  Because the arbitration agreement in Barr lacked that accompanying language, it was unenforceable.

I wonder whether the Judges have checked out their iPhone License Agreement recently?

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