Colorado Arbitration Agreement for Cars
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FAQ
Arbitration is a process whereby the dispute between the vehicle manufacturer and the consumer is resolved by a neutral third party, an arbitrator. In California, many manufacturers offer a California state-certified arbitration program.
The award is the decision of the arbitrator on the matters submitted to him or her under the arbitration agreement. If there is more than one arbitrator, the majority decision is binding.
To make the agreement appear more fair, some companies include a provision that allows you to opt out of the arbitration clause by sending them a letter, usually within a short time after you enter the contract.
Compelling ArbitrationBy initiating litigation, a party waives its right to arbitration. Upon being served with a lawsuit, a party seeking to enforce its right to arbitrate should promptly file a motion to compel arbitration and stay litigation17 or a motion to dismiss.
Arbitration is favored by the Federal Arbitration Act and similar state laws, and arbitration agreements, if properly drafted and administered, are enforceable under those laws. Arbitration agreements are governed primarily by contract law and the arbitrator must comply with the terms of the arbitration agreement.
By signing the contract, the consumer is agreeing to binding arbitration to settle any future dispute and also waiving the right to sue or appealeven if the dealership committed fraud.
This law provides that arbitration agreements are generally valid and enforceable. The major exception to this provision is that the arbitration agreement is not enforceable if it violates the general law of contracts which applies to all contracts under the law of the state that governs the agreement.
After much uncertainty, it is now settled law that if there is a challenge to the validity of the substantive contract between the parties, the arbitration clause survives such a challenge and the arbitrators are free to determine the validity or otherwise of the contract.
The Federal Arbitration Act provides that the enforceability of an arbitration agreement, is determined using generally applicable contract defenses, such as fraud, duress, or unconscionability. Under California law, a contract signed under economic duress may be rescinded.
