Commentators and lawmakers have called attention to the rising frequency of contractual arbitration as a non-negotiable condition of many relationships. Indeed, it is a rare individual who is not subject to at least one pre-dispute, binding arbitration agreement.
This Article studies common concerns associated with binding, pre-dispute arbitration agreements and evaluates their use in consumer-vendor, employee-employer, and franchisee-franchisor relationships. Having introduced concepts relevant throughout the Article, the Article in Part I studies contractual arbitration as a form of alternative dispute resolution for transactional disputes between consumers and vendors. It examines industry self-regulation, due process, consumer salience, and forum accessibility including online dispute resolution, among other matters. Part II evaluates concerns about unfairness toward the less powerful party in employment arbitration, including judicial safeguards against unconscionability and the proposed Forced Arbitration Injustice Repeal Act (the FAIR Act), while Part III critically examines bargaining power disparities between franchisees and franchisors.
Based on a comprehensive review of available data and literature, this Article finds that, while the most charitable interpretations by arbitration proponents are untenable, some measured but broadly supportive arguments for contractual arbitration can be persuasive. Although unchecked bargaining power disparities are rightfully concerning and should be addressed, contractual arbitration can nonetheless play a useful role in relational contracts.