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Court Rules New Jersey Car Dealership’s Arbitration Clause Too Confusing

Wednesday, June, 29, 2016

Arbitration clauses have received a great deal of negative attention in the media lately and one incident involving a car dealership in New Jersey is no exception. The Appellate Division recently ruled the dealership’s sales contract that included an arbitration clause to be too confusing. The court further refused to dismiss the lawsuit that had been filed against the dealership in relation to the contract.


The decision was made by a panel that included two judges after a dealership customer signed documents that contained three different arbitration clauses. The clauses included numerous contradictory provisions that the panel found to be hopelessly confusing for the average customer. One of the panel members said it was unlikely a customer would have any idea what terms he or she was agreeing to when purchasing a vehicle and would not understand how to file for arbitration, or know how much it would cost or within what time frame to file.


The complaint against the dealership stated the contract violated the New Jersey Consumer Fraud Act, as well as being a breach of warranty. The panel used the Appellate Divisions 2011 ruling in the NAACP of Camden County East vs. Foulke Management Corporation, which was a previous case that involved a vehicle dealership’s conflicting arbitration requirements. It too was considered vague and confusing, including whether the dealership would pay the arbitration fees and within what time frame the arbitration request needed to take place.


One clauses in the most recent questioned contract even required consumers to provide written notice to the dealership concerning the dispute and then wait 30 days before filing for arbitration, though other clauses did not feature this same requirement.