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Arbitration's Summer Soldiers: An Empirical Study of Arbitration Clauses in Consumer and Nonconsumer Contracts


Theodore Eisenberg


Cornell University - Law School

Geoffrey P. Miller


New York University School of Law

Emily L. Sherwin


Cornell University - Law School

December 18, 2007

Cornell Law School Legal Studies Research Paper No. 08-017
NYU Law and Economics Research Paper No. 08-28

Abstract:     
We provide the first study of varying use of arbitration clauses across contracts within the same firms. Using a sample of 26 consumer contracts and 164 nonconsumer contracts from large public corporations, we compared arbitration clause use in consumer contracts with their use in the same firms' nonconsumer contracts. Over three-quarters of the consumer agreements provided for mandatory arbitration but less than 10% of the firms' material nonconsumer, nonemployment contracts included arbitration clauses. The absence of arbitration provisions in nearly all material contracts suggests that, ex ante, many firms value, even prefer, litigation over arbitration to resolve disputes with peers. The frequent use of arbitration clauses in the same firms' consumer contracts appears to be an effort to preclude aggregate consumer action rather than, as often claimed, an effort to promote fair and efficient dispute resolution. Other common features of civil litigation reform discussion, avoidance of juries and loser-pays attorney fee rules, find little support in the pattern of contractual terms we observe.

Number of Pages in PDF File: 34

Keywords: Arbitration, Contracts, Consumer

JEL Classification: K00, K12, K41

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Date posted: December 20, 2007 ; Last revised: June 2, 2008

Suggested Citation

Eisenberg, Theodore and Miller, Geoffrey P. and Sherwin, Emily L., Arbitration's Summer Soldiers: An Empirical Study of Arbitration Clauses in Consumer and Nonconsumer Contracts (December 18, 2007). Cornell Law School Legal Studies Research Paper No. 08-017; NYU Law and Economics Research Paper No. 08-28. Available at SSRN: http://ssrn.com/abstract=1076968 or http://dx.doi.org/10.2139/ssrn.1076968

Contact Information

Theodore Eisenberg (Contact Author)
Cornell University - Law School ( email )
524 College Ave
Myron Taylor Hall
Ithaca, NY 14853
United States
607-255-6477 (Phone)
607-255-7193 (Fax)
Geoffrey P. Miller
New York University School of Law ( email )
Center for the Study of Central Banks
40 Washington Square South
New York, NY 10012-1099
United States
212-998-6329 (Phone)
212-995-4590 (Fax)
Emily L. Sherwin
Cornell University - Law School ( email )
524 College Ave
Myron Taylor Hall
Ithaca, NY 14853
United States
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