Tech Law Geek

Online arbitration

As more transactions have been completed entirely online, alternative dispute resolution mechanisms have also followed suit. 

Arbitration clauses in terms and conditions

• Enforceability of ADR clauses in terms and conditions

In the United States, the Federal Arbitration Act gives arbitration agreements priority in disputes arising out of a contract including such provisions.  Similar state laws based on the Uniform Arbitration Act (and recently Revised UAA) also give force to arbitration provisions in consumer as well as business-to-business contracts.

A minority of courts in California have held consumer ADR clauses unconscionable where the right to class-wide relief is waived.  For the small or medium sized e-tailer, however, challenges to the enforceability of arbitration provisions rarely succeed since the FAA and (R)UAA require the courts to defer to arbitrators on most disputes arising out of the associated contract.

• Use of third-party providers particular to ecommerce context

Online Dispute Resolution (ODR) providers offer direct negotiation, mediation and arbitration services online to resolve disputes between parties anywhere in the world.  A list of ODR providers is maintained by The Center for Information Technology and Dispute Resolution.

For business owners already familiar with their local Better Business Bureau, the BBB offers similar services online through its BBBOnLine Reliability Program.

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