"Unfair" Arbitration Clauses
Christopher R. Drahozal | 2001 U. Ill. L. Rev.
The use of predispute arbitration agreements, those that require the use of arbitration to resolve future disputes, has been widely debated by both academic scholars and the courts. While federal courts generally enforce these agree-ments, many academics disfavor their use, especially when used in contracts between businesses and consumers, employers and employees, and franchisors and franchisees. Critics of these types of arbitration agreements label them as mandatory and unfair. In fact, some courts have begun to recognize these criticisms in a variety of decisions that refuse to enforce such arbitration agreements.
In this article, Professor Christopher Drahozal fills a void in the existing literature by utilizing empirical methods to ana-lyze predispute arbitration agreements in consumer contracts. Through his research, Professor Drahozal finds that not only are unfair predispute arbitration agreements less prevalent than the existing literature might suggest, but that not all arbitration clauses can be labeled unfair. In addition, even unfair clauses may actually provide net benefits to the parties. The research identifies the circumstances in which courts and scholars should be wary of arbitration clauses in consumer contracts. At the same time, however, Professor Drahozal paints a more optimistic picture of this type of arbitration.
*Professor of Law, University of Kansas