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Arbitration Agreements - What Do They Mean?

Talk about 'em here.

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  • coincidence?? I just returned from dealership after signing a arbitration agreement. Though they refused to sell me the car without the agreement, the fineprint seemed reasonable to me. It says I have to waive my right to be part of any class action, cannot file any class action, can select my own arbitrator etc.

    I've searched through the forums and there are mixed opinions.

  • Dealers that require arbitration agreements won't ever waive them.. It is either sign, or buy your car somewhere else...

    If every dealer in town requires it.. you don't really have much of a choice..

    I think that stinks... but, there you go..

    Moderator - Prices Paid, Lease Questions, SUVs

  • tidestertidester Posts: 10,110
    If every dealer in town requires it.. you don't really have much of a choice..

    So then you're signing under duress? Sounds like a loophole to me. :)

    tidester, host
  • And given that you cannot sign away your right to sue, it is exactly what it is - an agreement, rather than a contract. The fact that you signed it can be held against you, but it in no way invalidates your right to civil remedy.

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  • I don't think that qualifies as duress.. No one is making you buy the car...

    If they require you to sign one to use the bathroom... that might be a different matter.. :)

    Moderator - Prices Paid, Lease Questions, SUVs

  • True... You can always sue... no matter what you have signed...

    However, your signature on that agreement may cause your claim to be denied.

    Moderator - Prices Paid, Lease Questions, SUVs

  • tidestertidester Posts: 10,110
    No one is making you buy the car...

    Yes, but if your only alternatives are buying from a dealer 400 miles away or walking to work it may be duress ... or conspiratorial business practices!

    tidester, host
  • cccompsoncccompson Posts: 2,388
    Whether such clauses can be enforced is highly case specific.

    Whenever I see language that I don't like in a "standard" contract, I just line it out. Never have had anybody thereafter refuse to conclude the transaction.
  • I have researched these agreements but find so little about them! I nailed down every other aspect of our recent car purchase, from avoiding mop & glo to refusing outrageous doc fees. But then, during the paper signing, the dealer produced an arbitration agreement; I signed it with some trepidation, and in my follow-up research I've found opinions ranging from "never sign one" to those saying they're pretty much standard in some areas.

    In rereading the one that I signed, it looks like some of the most insidious parts have been left out...but I still have a vague sense of discomfort. The dealer was straightforward in all other aspects of the transaction, but my post-sale research has me a bit scared.

    Next time I shop for a vehicle (probably in a year or so), I was planning to include "I will not sign an arbitration agreement" in my offer email, along with the other conditions that I included this time...but would that discourage dealers from responding? How do I find out if it really is pretty much standard here? I thought about calling some dealers, but I imagine they will say "Yes, it's standard" vs. giving me the idea that I can easily opt out.
  • pch101pch101 Posts: 582
    Next time I shop for a vehicle (probably in a year or so), I was planning to include "I will not sign an arbitration agreement" in my offer email, along with the other conditions that I included this time...but would that discourage dealers from responding?

    If it's that important to you, then I wouldn't sign it. If you must, then walk away once you've negotiated the transaction and you're ready to finish up.

    The true test is if you walk away from the deal and they don't attempt to preserve it. Some dealers may take the threat of litigation seriously enough to let you go, but I suspect that many will let it slide if you make an issue of it.

    Don't buy the line about agreements being "standard." Unless it's a government form mandated by law, there's nothing "standard" about it, that's just a line used in order to convince you that the agreement is non-negotiable.

    If you intend to do this, I wouldn't mention your intention not to sign until you've already completed your negotiations and the sale is wrapped up. The dealership will have far more to lose if you've already gone the distance and they've worked to close you, than if you mention this upfront. (After all, they didn't tell you when you walked onto the lot, "Hi, my name is Joe, and everyone who buys a car from me has to sign an arbitration agreement!") But do keep in mind that if this is important to them, they do reserve the right to lose your business if they choose.

    Incidentally, even though I'm not exactly thrilled to agree to arbitration, I'm not necessarily too hung up on this type of agreement, either. It doesn't have much practical effect if you are buying a new car without extras or financing from the dealer, and if the agreement is "non-binding." A non-binding agreement preserves your right to ultimately sue if you wish, and if I'm buying a new car without dealer financing or dealer-installed options, there's very little reason that I'd have to sue the dealer, anyway. If you buy a new lemon, your ultimate recourse is ultimately to the manufacturer, not to the dealer.
  • joel0622joel0622 Posts: 3,302
    If it helps at all I have lawyers sign the things in my office all the time and they don't give it a second thought.

    All it says is that you or we MAY CHOOSE to have a dispute between us decided by arbitration.

    Then it goes on to say that if it is arbitrated you won't participate in any class actions.
  • I'm wanting them to buy my car back under the Lemon Law.
  • joel0622joel0622 Posts: 3,302
    Does anyone in this forum have any advice,input,successful outcomes when it comes to the arbitration process?I will be meeting with an arbitrator next month about my 2007 Toyota Camry Lemon. To make a long and frustrating story short,I will be brief for now . I have a Toyota Camry with the flaring issues. I took it in at two months when I noticed the problem. I just left it at the dealer, they say nothing is wrong. One month after that,I drive it straight to the dealer and the service manager happen to be there and we went for a test drive and the flaring was obvious to him. We go back to his office, he puts in my VIN # and I a get a new transmission at 6,000 miles. NOT GOOD! I make a payment on this car every month and I just get nauseated. Cars cost a lot money! I expect more. The car still drives like crap. I miss my 10 year old Maxima that I gave to my father.

    Unless there is a lot more to this story I do not see the lemon law coming into effect. You bought a car, it had a problem and the dealer fixed it by replacing the transmission. That is no where even close to a situation where the lemon law would apply.
  • joel0622joel0622 Posts: 3,302
    Here is a brief description of the Federal Lemon Law. Which I would guess you have already read. But you will see it uses verbiage like multiple attempts, or 3 to 4 times of a recurring event etc.

    Whereas at one time you had no alternative but to allow the manufacturer or seller of a defective product an endless amount of repair attempts, State and federal statutes informally known as "Lemon Laws" provide for compensation to you where you have a defective product that cannot be fixed within a reasonable opportunity. The federal Lemon Law, officially known as the Magnuson-Moss Warranty Act, provides for the payment of your attorney fees and court costs if successful, as do most State Lemon laws.

    To qualify for protection under a Lemon Law, you must generally have a defective consumer product that has not been fixed within a reasonable amount of repair attempts. Most State Lemon Laws specifically apply to motor vehicles and require the manufacturer to refund your money or replace your vehicle if, during the first twelve to twenty-four months of ownership, your vehicle has suffered three to four repairs for the same problem or has been out of service by reason of repair more than thirty days. Although State Lemon Laws are generally limited to new vehicles, many states have enacted specific lemon statutes that protect purchasers of used vehicles and/or other consumer products such as Motor Homes and computers.

    The federal Lemon Law often extends protection far past State law, making warrantors responsible for irreparable defects for up to four years after the factory warranty has expired. This federal statute generally provides cash compensation where the warrantor cannot make your product free from defects within a reasonable opportunity. Unlike State Lemon Laws, the Magnuson-Moss Warranty Act applies not just to vehicles but instead to all consumer products - including boats and appliances. Magnuson-Moss also creates strict requirement for warrantors when drafting warranties and disclosing warranty terms, thereby eliminating much of the confusing "doubletalk" inherent in consumer warranties.
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