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Arbitration clauses are allowed because in contracts the tradition is that the parties are allowed to create private rules that will govern their future transac

Arbitration clauses are allowed because in contracts the tradition is that the parties are allowed to create private rules that will govern their future transaction. You can also nominate the venue and laws that will apply to the contract, even if you don't arbitrate. The reasoning is that the contract is a bargained document between the parties, and if a party does not like the contract, they are not forced to enter it. If what you get in return for the contract is not sufficient to join the contract, then you don't execute it. This is efficient so long as the bargaining power in the market is not highly asymmetrical. The US market is not ideal, but I'm not entirely certain arbitration provisions are a bad idea, regardless. One reason arbitration provisions might be good, is because its a way for companies to opt out of the hunting territory of the trial lawyers association. The lawyers are another powerful group that has created many kinds of nuisance lawsuits that act as a private tax on corporations in the US. If the private tax is unavoidable, the cost is passed on as a price increase to consumers. The lack of arbitration clause could manifest itself as increased cost of goods in the current climate, because of the huge cost of nuisance class actions, etc. Just a perspective.

arca_vorago 10y ago
The problem with this perspective is that it doesnt match reality. Consumers have not been taught how to properly negotiate and enter contracts, and companies creating the arbitration clauses almost always have the power to push back on changes until the consumer relents. I wash shocked when I ordered a test Dell Ubuntu machine, took the time to read the EULA/TOS, and was appaled at their terms, which included waiving of constitutional right to a jury! The real problem, the dark discussion we need to be having, is about the inequality of access to redress of greivance via the law. We live in a society that has created a system in which you must have money to pursue legal recourse, and in a world of increasing inequality, the fact is the port and middle class are increasingly railroaded by arbitration clauses and similar legalese understood by only the people who wrote it. I'm not advocating for restriction of private terms of contract, but corporations are abusing their power in the equation to the detriment of the people, so lets not lose sight of the reality, as opposed to the theoritical situation lobbyists would have us believe. As a proposed solution, I think contract law should be taught in highschool as core cirriculum. I have even recently added a section in my documentation for sysadmins to address the reading of eulas/tos, and signing of contracts.
- ocdtrekkie 10y ago
  In most cases, consumers have zero ability to negotiate contracts. You can't negotiate a EULA. You either accept it, or find a different product. And if some piece of software is vital to something or other else you need with no alternative, you don't even have much of a choice on whether or not to accept it.
  - Spivak 10y ago
    And it's not as if the courts are blind to this fact, there are protections when there is a power imbalance and the contract is take it or leave it, but I doubt any of these protections will extend to private arbitrators.
- chimeracoder 10y ago
  First of all, remember that, just because it's in a contract, that doesn't mean it's enforceable. Plenty of contracts have legally nonenforceable clauses (or clauses which are questionably enforceable), which is why almost every contract also has a clause that says, 'if any part of this contract is deemed unenforceable or invalid, the remainder shall remain in effect'. There are also other reasons that a clause might be legally enforceable in the general case, but still struck down in a particular suit given the context of the specific contract in question. > We live in a society that has created a system in which you must have money to pursue legal recourse Depends on what you mean by 'legal recourse'. You're welcome to, for example, go to small-claims court and have both sides represent themselves[0]. That's as close to free as you can get. The problem is that legal recourse for large matters must cost money. You wouldn't want to go to trial for a large civil suit without a lawyer, because there's too much at stake for you to risk it by representing yourself. But lawyers cost money, because they have the opportunity costs of their own time to worry about. And it's not like you can't get decent representation for free. You can get a lawyer on contingency, which basically means that you have to convince them that your case is solid enough that you're likely to win. In that case, you don't have to pay much (or anything) up-front. [0] In some states, you cannot have a lawyer represent you in small-claims court - both sides must represent themselves.
- pdabbadabba 10y ago
hodgesrm 10y ago
I"m with you even though I'm extremely leery of arbitration in areas like automobile defects or employment agreements. In these cases it's often only the threat of massive awards that makes companies think twice before they engage in business practices that lead to substantial harm. The potential harm related to Internet access does not seem very high. It's fair to balance that against the cost of frivolous litigation. The market can sort this one out.
- HarryHirsch 10y ago
  I'm just curious what Comcast and Google are trying to defend against. You'd think that the cases your typical home subscriber and probably your business subscriber would bring would in most all cases be litigated in Small Claims court. It would be about early termination because the connection is too poor or the uptime does not conform to contract. Are they trying to quash class-action suits or what? I haven't got a clue, someone more familiar with the subject should clue us all in.
  - hodgesrm 10y ago
    It's usually class actions, which can be very expensive to fight and have large enough awards that legal teams are motivated take them on contingency. The claims you describe are so small they are barely worth litigating even in Small Claims court.
Spivak 10y ago
> This is efficient so long as the bargaining power in the market is not highly asymmetrical. An asymmetrical legal and financial balance isn't even the real problem, it's that contracts from large companies are on paper non-negotiable with the real negotiation occurring is in court when the terms of the contract are contested. We already have some protections for people who agree to take-it-or-leave-it contracts but, to me, it's not terribly clear whether those protections extend to private arbitrators who might blindly rule on the letter of the contract.

arca_vorago 10y ago

The problem with this perspective is that it doesnt match reality. Consumers have not been taught how to properly negotiate and enter contracts, and companies creating the arbitration clauses almost always have the power to push back on changes until the consumer relents. I wash shocked when I ordered a test Dell Ubuntu machine, took the time to read the EULA/TOS, and was appaled at their terms, which included waiving of constitutional right to a jury! The real problem, the dark discussion we need to be having, is about the inequality of access to redress of greivance via the law. We live in a society that has created a system in which you must have money to pursue legal recourse, and in a world of increasing inequality, the fact is the port and middle class are increasingly railroaded by arbitration clauses and similar legalese understood by only the people who wrote it. I'm not advocating for restriction of private terms of contract, but corporations are abusing their power in the equation to the detriment of the people, so lets not lose sight of the reality, as opposed to the theoritical situation lobbyists would have us believe. As a proposed solution, I think contract law should be taught in highschool as core cirriculum. I have even recently added a section in my documentation for sysadmins to address the reading of eulas/tos, and signing of contracts.

ocdtrekkie 10y ago
In most cases, consumers have zero ability to negotiate contracts. You can't negotiate a EULA. You either accept it, or find a different product. And if some piece of software is vital to something or other else you need with no alternative, you don't even have much of a choice on whether or not to accept it.
- Spivak 10y ago
  And it's not as if the courts are blind to this fact, there are protections when there is a power imbalance and the contract is take it or leave it, but I doubt any of these protections will extend to private arbitrators.
chimeracoder 10y ago
First of all, remember that, just because it's in a contract, that doesn't mean it's enforceable. Plenty of contracts have legally nonenforceable clauses (or clauses which are questionably enforceable), which is why almost every contract also has a clause that says, 'if any part of this contract is deemed unenforceable or invalid, the remainder shall remain in effect'. There are also other reasons that a clause might be legally enforceable in the general case, but still struck down in a particular suit given the context of the specific contract in question. > We live in a society that has created a system in which you must have money to pursue legal recourse Depends on what you mean by 'legal recourse'. You're welcome to, for example, go to small-claims court and have both sides represent themselves[0]. That's as close to free as you can get. The problem is that legal recourse for large matters must cost money. You wouldn't want to go to trial for a large civil suit without a lawyer, because there's too much at stake for you to risk it by representing yourself. But lawyers cost money, because they have the opportunity costs of their own time to worry about. And it's not like you can't get decent representation for free. You can get a lawyer on contingency, which basically means that you have to convince them that your case is solid enough that you're likely to win. In that case, you don't have to pay much (or anything) up-front. [0] In some states, you cannot have a lawyer represent you in small-claims court - both sides must represent themselves.
pdabbadabba 10y ago

hodgesrm 10y ago

I"m with you even though I'm extremely leery of arbitration in areas like automobile defects or employment agreements. In these cases it's often only the threat of massive awards that makes companies think twice before they engage in business practices that lead to substantial harm. The potential harm related to Internet access does not seem very high. It's fair to balance that against the cost of frivolous litigation. The market can sort this one out.

HarryHirsch 10y ago
I'm just curious what Comcast and Google are trying to defend against. You'd think that the cases your typical home subscriber and probably your business subscriber would bring would in most all cases be litigated in Small Claims court. It would be about early termination because the connection is too poor or the uptime does not conform to contract. Are they trying to quash class-action suits or what? I haven't got a clue, someone more familiar with the subject should clue us all in.
- hodgesrm 10y ago
  It's usually class actions, which can be very expensive to fight and have large enough awards that legal teams are motivated take them on contingency. The claims you describe are so small they are barely worth litigating even in Small Claims court.

Spivak 10y ago

> This is efficient so long as the bargaining power in the market is not highly asymmetrical. An asymmetrical legal and financial balance isn't even the real problem, it's that contracts from large companies are on paper non-negotiable with the real negotiation occurring is in court when the terms of the contract are contested. We already have some protections for people who agree to take-it-or-leave-it contracts but, to me, it's not terribly clear whether those protections extend to private arbitrators who might blindly rule on the letter of the contract.