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From above: Consumer Financial Services Agreements: As of May 5th, the Consumer Financial Protection Bureau has proposed a rule that would prohibit mandatory a

From above: Consumer Financial Services Agreements: As of May 5th, the Consumer Financial Protection Bureau has proposed a rule that would prohibit mandatory arbitration clauses in financial services agreements that limit access to class action lawsuits. Once formalized, this rule would apply to all contracts, including those already signed. Although such a rule would not necessarily prohibit mandatory arbitration for single-plaintiff claims, arbitration clauses that do not specifically exclude class action lawsuits from their reach may be invalid regardless.[1] Consumer Contracts: Although generally upheld, mandatory arbitration clauses in consumer contracts are non-binding when there is evidence of fraud. The Theranos lawsuits have recently brought this reality back to the attention of corporate lawyers. Because Theranos and Walgreens face accusations of widespread fraud, otherwise enforceable arbitration clauses are thrown out, allowing for class-action claims regardless. It’s important to note that these cases demonstrate that the fraud must merely be investigated, not conclusively proven, for the courts to now invalidate arbitration clauses.[1] I think it's safe to say the alleged fraud in this case is under investigation. Edit: Link fixed! [1]: https://www.priorilegal.com/blog/the-limits-of-mandatory-arbitration-clauses https://www.priorilegal.com/blog/the-limits-of-mandatory-arb...

Lazare 10y ago
Your link is broken for me, FYI. In any case: > Judges in California and federal courts have ruled arbitration clauses signed by customers when they opened legitimate accounts prevent them from suing even over allegedly fraudulent accounts created without their knowledge. http://www.latimes.com/business/la-fi-wells-fargo-arbitration-20151205-story.html http://www.latimes.com/business/la-fi-wells-fargo-arbitratio... Laws have been proposed to change this. Of course, given the election results, I highly doubt the bills, or the proposed CFPB rule you mention are going anywhere.
- FullMtlAlcoholc 10y ago
  Fixed the link above! Can I pester you with one more question? Is there anything in the law about good faith in contracts? Say, I sign a contract with a private school for my son's education. (Note, this is a ridiculous scenario) that includes binding arbitration. If I find that a teacher has been sexually abusing him and the administration tried to cover it up, would I be restricted from a lawsuit and only allowed binding arbitration?
  - Lazare 10y ago
    Talk to a lawyer in your local jurisdiction. :) But offhand: > Is there anything in the law about good faith in contracts? Not in the sense you mean, no. Generally speaking, if they sign it in bad faith (that is, with no intent to comply), and they do not comply, that would be fraud (ie, a crime). If they sign it in good faith (that is, with an intent to comply) but later do not comply, that's breach of contract (ie, a tort) but not fraud. In both cases the contract is broken, but only because they broke it. The intent to break it isn't really relevant to that. Generally speaking the solution for your question is "make sure the contract contains a clause that automatically terminate the contract on initiation of a criminal investigation for child abuse by the authorities" if you're worried about that. Edit: It's not directly relevant to your question, but I feel like I should link this article which is hilarious and disturbing, and goes into some details on the fraud/breach of contract distinction. https://www.bloomberg.com/view/articles/2016-05-23/countrywide-mortgage-hustle-turns-out-not-to-be-fraud https://www.bloomberg.com/view/articles/2016-05-23/countrywi...
    - FullMtlAlcoholc 10y ago
      Aahh, ok. So say I sign a contract with a co-founder to develop an app. This co-founder is secretly part of my competition and he steals my source code for his company. That would be fraud?
      - tonybako 10y ago
        Not necessarily. Typically your contract will be with the company you co-founded. Your co-founder is entering your company into a contract with you by signing as an authorized officer on behalf of the company. If that contract assigns the IP to your company, your cofounder is stealing your company's IP. If the contract says the source code is your IP (and perhaps licenses its use to the company for some permitted purpose), then your co-founder is stealing from you. Now, if you can show the sole purpose of him forming the business with you was to steal your source code, then that's fraud.
    - bjelkeman-again 10y ago

Lazare 10y ago

Your link is broken for me, FYI. In any case: > Judges in California and federal courts have ruled arbitration clauses signed by customers when they opened legitimate accounts prevent them from suing even over allegedly fraudulent accounts created without their knowledge. http://www.latimes.com/business/la-fi-wells-fargo-arbitration-20151205-story.html http://www.latimes.com/business/la-fi-wells-fargo-arbitratio... Laws have been proposed to change this. Of course, given the election results, I highly doubt the bills, or the proposed CFPB rule you mention are going anywhere.

FullMtlAlcoholc 10y ago
Fixed the link above! Can I pester you with one more question? Is there anything in the law about good faith in contracts? Say, I sign a contract with a private school for my son's education. (Note, this is a ridiculous scenario) that includes binding arbitration. If I find that a teacher has been sexually abusing him and the administration tried to cover it up, would I be restricted from a lawsuit and only allowed binding arbitration?
- Lazare 10y ago
  Talk to a lawyer in your local jurisdiction. :) But offhand: > Is there anything in the law about good faith in contracts? Not in the sense you mean, no. Generally speaking, if they sign it in bad faith (that is, with no intent to comply), and they do not comply, that would be fraud (ie, a crime). If they sign it in good faith (that is, with an intent to comply) but later do not comply, that's breach of contract (ie, a tort) but not fraud. In both cases the contract is broken, but only because they broke it. The intent to break it isn't really relevant to that. Generally speaking the solution for your question is "make sure the contract contains a clause that automatically terminate the contract on initiation of a criminal investigation for child abuse by the authorities" if you're worried about that. Edit: It's not directly relevant to your question, but I feel like I should link this article which is hilarious and disturbing, and goes into some details on the fraud/breach of contract distinction. https://www.bloomberg.com/view/articles/2016-05-23/countrywide-mortgage-hustle-turns-out-not-to-be-fraud https://www.bloomberg.com/view/articles/2016-05-23/countrywi...
  - FullMtlAlcoholc 10y ago
    Aahh, ok. So say I sign a contract with a co-founder to develop an app. This co-founder is secretly part of my competition and he steals my source code for his company. That would be fraud?
    - tonybako 10y ago
      Not necessarily. Typically your contract will be with the company you co-founded. Your co-founder is entering your company into a contract with you by signing as an authorized officer on behalf of the company. If that contract assigns the IP to your company, your cofounder is stealing your company's IP. If the contract says the source code is your IP (and perhaps licenses its use to the company for some permitted purpose), then your co-founder is stealing from you. Now, if you can show the sole purpose of him forming the business with you was to steal your source code, then that's fraud.
  - bjelkeman-again 10y ago