Monday, September 3, 2012
The case is pretty plain vanilla. Vassilkovaska bought a car from Woodfield Nissan, Inc. (Woodfield). A dispute ensued over allegedly misleding terms in the finance agreement, and Vassilkovska sued in state court. However, Vassilkovska had also signed a separate arbitration agreement. The terms of the arbitration agreement provided that Vassilkovska had to arbitrate any "dispute" she had with Woodfield and provided for certain exceptions. The court found that the exceptions covered every sitution in which Woodfield would sue Vassilkovska and none in which Vassilkovska would sue Woodfield. As a result, the court found that there was no consideration for Vassilkovska's agreement to arbitrate. She promised to arbitrate; Woodfield promised nothing.
In the process of selling a car,
Woodfield took things too far.
Of compelled arbitration,
The parties must be on a par.
The last line should not of course be taken to indicate that there must be "adequate" consideration; only that both sides must give consideration that induces a reciprocal promise.
A student asked why Woodfield would have opted for a separate arbitration agreement over an arbitration clause in a purchase or finance agreement. I admit that I am stumped. Can anybody think of a reason why there could be an advantage to a separate arbitration agreement?