Ls311_Business_Law_Unit_2_Case_Study

Brandi Locke LS 311: Business Law Unit 2 Case Analysis July 15, 2013 The Case Review the following case. Prepare an analysis that will demonstrate your ability to both answer the questions presented and incorporate theories and concepts from this week’s material. Thomas Baker and others who bought new homes from Osborne Development Corp. sued for multiple defects in the houses they purchased. When Osborne sold the homes, it paid for them to be in a new home warranty program administered by Home Buyers Warranty (HBW). When the company enrolled a home with HBW, it paid a fee and filled out a form that stated the following: “By signing below, you acknowledge that you... CONSENT TO THE TERMS OF THESE DOCUMENTS INCLUDING THE BINDING ARBITRATION PROVISION contained therein. ” HBW then issued warranty booklets to the new homeowners that stated: “Any and all claims disputes and controversies by or between the Homeowner, the Builder, the Warrant Insurer and/or HBW...shall be submitted to arbitration.” Would the new homeowners be bound by the arbitration agreement, or could they sue the builder, Osborne, in court' (Baker v Osborne Development Corp., 159 Cal.App.4th 884,71 Cal.Rptr.3d 854 (2008) 1. In responding to the question be sure to: 2. Discuss what courts are saying about the enforcement of arbitration clauses in contracts. When Thomas Baker and the other homebuyers purchased their properties from Osborne Development Corp., they may not have known that there were defects on the property they would have to go into arbitration for restitution. From what I understand of the reading, Osborne Development Corp. purchased the home warranties (HBW) after the purchase of the properties they then went forward with giving the documents to the new owners. When it comes to the federal arbitration act which the homebuyers has signed and were told to refer to, it allows the courts to hold up any and all arbitration clauses automatically that are included in the purchase of goods and services in this case the homes and HBW, without any question as long as the contract was developed in a proper format. The first thing that the retailer has to make sure of when selling goods and services in this case the home as well as the Hit must be on a contract with an arbitration clause that the consumer has the ability to negotiate with the terms of the arbitration clause that is being held within the contract that was signed. If this part or any of the contracts were negotiable to Mr. Baker along with all of the other homebuyers then they would have had the ability to negotiate the arbitration clause completely out of the contract. This would allow them to be able to sue HBW where the home warranty was issued from as well as Osborne Development who had built the house. When it comes to Osborne Development Corp. if they did not allow, or even inform Mr. Thomas Baker and the other homeowners who purchased the homes from them, of the right to be able to negotiation that would then make Mr. Thomas Baker and the other homeowners who purchased homes from them to be able to enter this into court as facts into their testimony and they would then have a strong chance of getting the arbitration agreement stricken from the contract. Here in the United States, not all states actually use the federal arbitration act, for example, California where this case took place does allow for the arbitration clause to be removed from any contract, just as long as both parties are agreeable to this action and as of April 20, 2010 a published decision by “the Ninth Circuit Court of Appeals affirmed a district court decision holding that a mandatory Arbitration Agreement was both procedurally and substantively unconscionable and therefore it makes it unenforceable under the California law” (baker v., 2013). From what I understand from the reading, Osborne Development Corp. paid the fee to HBW and signed the documents entering the properties into contract. This was also done without the homeowners’ having the ability to negotiate the contract, and because the contract is binding in the state of California the insurance company had to allow the plaintiff to negotiate the contract as to whether or not the arbitration clause was going to stay in the contract or if they were going to remove it. Furthermore with the ruling from the Ninth Circuit Court, HBW cannot force or require their clients to sign such a document and must allow them the opportunity to negotiate the terms. The plaintiffs will be able to argue in a court of law that mandatory arbitration contracts are illegal in the state, and if the contract that they signed is grandfathered in to the law, they would be able to show that they were unable to enter into negotiations whatsoever in regards to the contract. The insertion of the arbitration clause at this point is therefore not valid and would give the plaintiffs in this case Mr. Thomas Baker along with the other homebuyers the ability to forgo ADR and sue the companies for full restitution. Reference: Jentz, G.A. and Miller, R.L. (2010). Fundamentals of Business Law: Summarized Cases. Mason, OH: Cengage Learning. (2007-2008). NCRCorporation, V Korala Associates LTD. UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT. Retrieved from http://www.ca6.uscourts.gov/opinions.pdf/08a0029p-06.pdf baker v. osborne development corp. In (2013). Lawyer.com. Retrieved from http://www.lawyer.com/cases/14422029627313905142.html