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Know Before You Sign: Arbitration Agreements


The U.S. District Court for the Western District of Oklahoma recently made an important decision about arbitration agreements. An arbitration agreement can be a clause in a contract or a separate document that pertains to a contract. Arbitration is a form of Alternative Dispute Resolution (ADR) that is intended to reduce the cost of litigation in the event of a dispute between parties. When arbitration is agreed to as part of a contract, an arbitrator acts in place of a judge and reviews evidence to make a legally binding decision.

The recent District Court finding highlights the necessity for contract review by a qualified attorney. The case in question involved the purchase of a truck by David and Krystina Mooneyham from Big Red Kia. During the purchase, the Mooneyhams signed a bill of sale, a spot delivery agreement, an arbitration agreement, and a retail installment sale contract.

As often happens, the original financing for the vehicle fell through, but the dealership was able to find an alternative. Two days later, the Mooneyhams returned to Big Red Kia and signed new contracts. This time, the Retail Purchase Agreement/Bill of Sale had a different total selling price. The company failed to provide a new arbitration agreement, though all of the other documents were re-signed.

Right document, wrong time

Two years later, the Mooneyhams sued Big Red Kia. The company moved to compel arbitration, but the move was denied because of the missing contract. The court found that the original and final transactions were separate and distinct, and that the original arbitration agreement was invalid.

Unfortunately, appealing the decision of an arbitrator can be difficult, if not impossible. In some cases, an arbitration agreement can cause more problems than it solves. Contracts can be complex and dense documents; it’s always a good idea to review a contract with an experienced attorney before signing. The Mooneyhams were the winners in this case, but similar cases may not go the same way.

The takeaway? Make sure you know what you’re signing. If you are presented with a contract that you don’t fully understand, the experienced and professional attorneys at Stipe Law Firm can help you make the right decision that will protect you and your family in the future. Contact our Oklahoma insurance dispute attorneys today for more information.