That Time I Tried To Reject the Arbitration Clause in a Contract to Buy A Car

Since there’s absolutely nothing of interest happening in the business world these days, I figure it’s a good time to tell the story of how I tried to reject an arbitration clause when buying a car.

It was 2013, and I’d just moved to Durham, North Carolina to become a Visiting Assistant Professor at Duke.  It was quite the move; other than for schooling and clerkships, I’d spent my entire life – including my legal career – in New York City.  I’d never owned a car or really even driven one before; I had to take driving lessons in advance.  And when I arrived in Durham, I spent the first week frantically researching cars – there’s a difference between make and model, who knew? – before forming my preferences (namely, inexpensive, good gas mileage, and very very safe, to give myself a fighting chance in the all-but-inevitable crash. And small, so I’d also have a fighting chance at staying in a single lane).

I looked at a mix of new cars and used cars before settling on a bright red Kia Rio, gently used from a previous life as a rental.  (Me on test drives is a whole ‘nother story; imagine my barely-licensed self driving around car salespeople who are trying desperately to be polite and engaging and also to survive the encounter).

And that’s when the haggling began.  I’d done my research about cars and car prices, and back and forth we went.  It had been raining, I was pretty soaking wet, and the showroom was heavily air conditioned, but that didn’t stop me from an extended negotiation – prolonged by the sales guy repeatedly saying he had to “check with the manager” and disappearing into a back room, presumably to take a break and otherwise put on a display of great reluctance.  I took advantage of the time to talk to an insurance broker and arrange for coverage, since I’d be driving the car off the lot once the sale was concluded.

Finally, after maybe an hour of this, we struck a deal, and they led me into the back to close.  There was an identity check, and then a long series of contracts to sign, where they pointed out various provisions and I had to initial each separately.  And then we got to the arbitration agreement for any disputes with the dealership.

I said, I don’t want to sign an arbitration agreement.

The dude was shocked, not sure how to respond.  He said, hesitantly, “Okay, that’s your right,” and we crossed that provision off.  I handed over my cheque.

We moved all my things into my new car, and they agreed they’d return my rental for me.  They put a dealer’s license plate onto the Kia, and I started to drive it off the lot.

At that point, the manager of the dealership came running, running out of the building, waving his hands and telling me to stop.  I stopped.

He told me they couldn’t sell it to me without an arbitration agreement.

In retrospect, my reaction should have been “You already did.”  But I was too kind.

Instead, we unwound the entire thing.  We put my things back in the rental, got rid of the dealer’s plate, tore up the contracts – at that point, the safe had closed on a time lock, so they couldn’t open it up to return my cheque, but they agreed to mail it to me.  I called the insurance company to cancel the policy, and I drove away.

The next day, I went to a different dealer to buy my second choice car, a brand new blue Hyundai Accent.  I looked over the paperwork carefully – noted that the manufacturer’s manual had an arbitration clause, but you could opt out within 30 days – signed on the dotted line, and I had my car.  The same car I drive today.

When I got home from the dealer, I went over the paperwork again.  And that’s when I noticed, on one of the faded carbon copies of something I’d signed, printed very very faintly on the back, was a dealer arbitration clause.