Until recently it was almost universally assumed that the Federal Arbitration Act (FAA) allowed courts to refuse enforcement of an arbitration clause found to be unconscionable as a matter of law. But there is change in the air. A “war” has broken out. On one side are those who believe the Supreme Court decision in AT&T Mobility v. Concepcion, 131 S. Ct. 1740 (2011), delivers a near death blow to the application of unconscionability under the FAA. On the other side are those who believe Concepcion notwithstanding, unconscionability is still viable. Those wanting to exclude the doctrine are often pro-business (Business Forces) while those wanting unrestricted application of the unconscionability doctrine are often pro-consumer (Consumer Forces).
Both sides have brilliantly articulated their arguments1 suggesting a draw which leaves it to the Supreme Court to resolve the issue. And this may not happen for many years, if ever. In the meantime, are there alternatives (not substitutes) available for evaluating the fairness of an arbitration clause? The answer is “yes.” There are two viable possibilities, Tennessee’s “Circle of Assent” doctrine and Arizona’s “Darner Motor” doctrine, together referred to here as the “reasonable expectation” doctrines. Both of these doctrines assess questions of fairness as factual whereas unconscionability views such questions as an issue of law.
Unconscionability Issue
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