The Impact of Mandatory Arbitration on the Common Law Regulation of Standard Terms in Consumer Contracts

17 Pages Posted: 27 Feb 2017  

James P. Nehf

Indiana University Robert H. McKinney School of Law

Date Written: February 25, 2017

Abstract

The focus of this paper is the regulation of standard terms in consumer contracts at common law, i.e., judges deciding cases in published opinions. In particular, I focus on the two most important common law doctrines in this area — unconscionability and good faith — and to a lesser extent on court decisions that interpret consumer statutes. They have all played a central role in regulating standard terms in consumer contracts over the years, yet their continuing role is being threatened by the proliferation of mandatory arbitration provisions in consumer contracts. If this trend continues, the ability of courts to further develop contract doctrine in consumer transactions may be severely limited. I begin with a discussion of the role that common law plays in regulating consumer transactions. I then discuss how the unconscionability and good faith doctrines have evolved as limitations on standard terms in consumer contracts. Next I discuss the increasing use of mandatory arbitration clauses in consumer contracts and the likely effects of this trend on consumer contract litigation. Toward the end of the paper, I explore what this might mean going forward if the common law of unconscionability and good faith in consumer contracts are essentially frozen in time, and if mandatory arbitration results in fewer published decisions interpreting and applying consumer statutes.

Keywords: Arbitration, Consumer, Consumer Contracts, Unconscionability, Good Faith, Bad Faith, Mandatory Abitration, Common Law

Suggested Citation

Nehf, James P., The Impact of Mandatory Arbitration on the Common Law Regulation of Standard Terms in Consumer Contracts (February 25, 2017). 85 Geo. Wash. Law Review (2017). Available at SSRN: https://ssrn.com/abstract=2923746

James P. Nehf (Contact Author)

Indiana University Robert H. McKinney School of Law ( email )

530 West New York Street
Indianapolis, IN 46202
United States

Paper statistics

Downloads
71
Rank
272,467
Abstract Views
192