Unconscionable Contracts

News & Analysis as of

New Jersey Court Compels Arbitration, Declines To Appoint Substitute Arbitrator Despite “Exorbitant” Administrative Fee

Terra Finance LLC brought an action to compel arbitration. Defendant Acrow Corporation moved to dismiss the action under Fed. R. Civ. P. 12(b)(6), arguing that the arbitration clause was unconscionable, and therefore...more

Ninth Circuit Reverses District Court Decision On Unconscionability Of Dispute Resolution Agreement, Severs Problematic Provisions

The Ninth Circuit reversed a district court’s finding that a dispute resolution provision (“the Provision”) of an employment agreement was substantively and procedurally unconscionable, upholding the provision as not tainted...more

Recent Decisions Clarify (Un)Enforceability of Class Action Waivers in Employment Agreements

Companies looking to waive class action rights of employees may instead be waving goodbye to provisions in their employment contracts. Two recent decisions in California—one administrative and one in the 9th Circuit—recently...more

NC Fiduciaries Have a Duty to Explain Arbitration Agreements in Contracts

The Supreme Court of North Carolina recently issued an opinion that could have a substantial impact on the enforceability of arbitration agreements when a fiduciary relationship exists, particularly in the context of consumer...more

Defence & Indemnity - December 2016: II. LIABILITY ISSUES B.

B. Where a contract for security services explicitly provides that it is not a contract for insurance and contains an enforceable liability exclusion clause, the security provider will not be liable for the loss. ...more

Want to Arbitrate? Not So Fast. California Court of Appeals Decision Illustrates Limits to Contractual Obligation to Arbitrate

On December 27, 2016, the California Court of Appeals published a decision on the enforceability of an Alternative Dispute Resolution Agreement (the "Agreement") in the context of an employee-employer relationship.? The issue...more

In 2016 the Texas Supreme Court Continues to Favor Arbitration

In 2016, the Texas Supreme Court issued three important opinions affecting arbitration agreements. The most significant was Hoskins v. Hoskins, 497 S.W.3d 490 (Tex. 2016). The issue in that case was whether a party seeking to...more

North Carolina Federal Court Holds That Arbitration Clause Requiring Panel To Render A Decision Within 30 Days Is Not...

In July, a federal court in North Carolina held that an arbitration provision which required the arbitration panel to reach a decision within thirty days of their selection was not unconscionable. Arising out of a dispute...more

California Court of Appeal Reinforces Prior Holdings and Allows Employer to Enforce Arbitration Award in Contract of Adhesion

In Da Loc Nguyen v. Applied Medical Resources, No. G057702 (Cal. Ct. App. October 14, 2016) (hereinafter “Nguyen”), the California Court of Appeal upheld a ruling compelling arbitration of plaintiff’s individual claims...more

New Arbitration Protections for CA Employees

California’s legislature has passed two new statutes that increase the protections for employees arbitrating workplace disputes. SB 1007, which passed on September 1, 2016, gives any party to arbitration proceedings “the...more

Government Attacks on Non-Compete Agreements Continue

Non-compete agreements have long been used by employers as an effective tool to protect their valuable trade secrets and confidential information. However, employers’ overuse of non-compete agreements and employers’ practice...more

English-Only Arbitration Agreement Deemed Unenforceable

Seyfarth Synopsis: An arbitration provision that was provided only in English to a population consisting of one-third Spanish speakers, and that required claimants to bear one-half of arbitration expenses, was unenforceable...more

Federal Appeals Court Hands Uber Major Victory In Arbitration Agreement Fight

The 9th Circuit Court of Appeals delivered a significant victory to Uber and other gig economy businesses by reversing a trial court’s denials of Uber’s motions to compel arbitration in companion class action lawsuits brought...more

The New York Attorney General’s Crackdown on Non-Compete Agreements: What It Means for Companies

Background - Recently, the NYAG has turned quite a few heads by entering into a new legal arena: challenging non-compete agreements between companies and their employees. The NYAG settled two investigations brought...more

Illinois Prohibits Non-Compete Agreements with Low-Wage Employees

Effective January 1, 2017, the Illinois Freedom to Work Act (the “Act”) will prohibit private sector employers from entering into non-competition agreements with employees earning a “low wage.” The Act defines low-wage...more

FRANCHISOR 101: Non-Competes for Franchisees’ Employees

A "non-compete" provision limits the franchisee's ability, after the franchise agreement ends, to continue to work in a similar type of business to the franchise within a certain time period and geographic area. The purpose...more

Smith v. D.R. Horton, Inc.: The End of Arbitration for Residential Developers and Builders in South Carolina?

Mark Twain famously wrote that the reports of his death were exaggerated. Following the South Carolina Supreme Court’s decision in Smith v. D.R. Horton, Inc. last month, you may have heard arbitration is dead for South...more

Limitations of Liability Clause Does Not Violate Ohio's Consumer Sales Practices Act

Contractors often attempt to limit their liability by including a limitations of liability clause in the contract. Plaintiffs attempt to avoid the limitations of liability by asserting that the clause is unconscionable under...more

The Dennis Decision: A Shot Across the Bow for Hospitals

A recent Virginia court decision questions the reasonable value of health care services and creates a challenge to debt collection efforts by hospitals. In March, the Circuit Court for Henry County, Patrick County, and the...more

The New York Attorney General’s Crackdown on Non-Compete Agreements: What It Means for Investment Managers

Key Points - - To the surprise of many, the New York Attorney General (NYAG) has become active in challenging non-compete agreements entered into between companies and their employees. - The NYAG’s...more

South Carolina Supreme Court Decision Impacts Enforceability of Arbitration Provisions in New Residential Construction Sales...

On July 6, 2016, the South Carolina Supreme Court filed its Opinion No. 27645, captioned Smith v. D.R. Horton, Inc., in which it affirmed the Court of Appeals' refusal to compel arbitration between new home purchasers and the...more

Reminder to New Jersey Employers: Shortening the Law Against Discrimination’s Statute of Limitations is Prohibited

Employers in New Jersey should be aware that a recent New Jersey Supreme Court decision invalidated a contractual provision that shortened the statute of limitations for bringing a claim for discrimination under the Law...more

Employers Can’t Contractually Shorten Time For Filing Claims Under N.J. Law Against Discrimination

Last week the New Jersey Supreme Court issued its long-awaited decision in Rodriguez v. Raymours Furniture Co., Inc., ruling that the two-year statute of limitations for filing a lawsuit alleging violations of the New Jersey...more

New Jersey Rejects Contractual Shortening of Limitations Period

The New Jersey Supreme Court’s decision forbids employers from contractually shortening the two-year limitations period under the state’s Law Against Discrimination. In a decision issued on June 15 that reversed two...more

Please, Take Your Time: NJ Supreme Court Voids Contracts That Limit Workers’ Time to Sue

On June 15, 2016, the New Jersey Supreme Court issued its long-awaited decision in Sergio Rodriguez v. Raymours Furniture Company, Inc., in which it addressed whether the two-year statute of limitations under the New Jersey...more

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