ARB NOT ONE-SIDED

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ARB NOT ONE-SIDED

Postby Administrator » Tue Sep 30, 2014 11:13 am

ARB NOT ONE-SIDED



Morgan v. Bill Kay Chrysler Plymouth
Not Reported in F.Supp.2d, 2002 WL 31133102
N.D.Ill.,2002.
July 17, 2002

The court also concludes that the arbitration agreement is not one sided or oppressive. The only “one sided” nature of the agreement is that Bill Kay may avoid arbitration and pursue certain claims against the buyer in court. Some courts consider this argument to be an issue of “mutuality of obligation.” See Lopez v. Plaza Fin. Co., No. 95 C 7567, 1996 WL 210073, at *4 (N.D.Ill. Apr.25, 1996). Under Illinois law, mutuality of obligation is required only “to the extent that both parties to an agreement are bound or neither is bound. If the requirement of consideration has been met[,] mutuality of obligation is not essential.” S.J. Groves & Sons Co. v. State, 93 Ill.2d 397, 67 Ill.Dec. 92, 444 N.E.2d 131, 134 (Ill.1982) (citing Restatement (Second) of Contracts § 79 (1981) (internal quotations and other citations omitted)), overruled on other grounds by Rossetti Contracting Co. v. Court of Claims, 109 Ill.2d 72, 92 Ill.Dec. 521, 485 N.E.2d 332, 335 (Ill.1985). Applying Illinois law, numerous courts in this district have rejected the position that for an arbitration agreement to be mutual, both sides must promise to arbitrate at least some specified set of claims. See, e.g., Dorsey, 46 F.Supp.2d at 807 (“[C]ontracts need not be reciprocal to be enforceable.”); Design Benefit Plans, Inc., 940 F.Supp. 200 (N.D.Ill.1996) (applying S.J. Groves in a challenge to an arbitration clause); but see Lopez, 1996 WL 210073, at *5 (invalidating arbitration agreement where the defendant did not obligate itself to submit any of its own claims to arbitration). In this case, even if Bill Kay is not obligated to arbitrate any claims, the contract is clearly supported by consideration on both sides and explicitly provides that both parties are bound by an arbitrator's decision. This case does not involve an “escape hatch clause,” as found in insurance contracts and condemned by Illinois courts, which provides that an insurer is not bound by an unfavorable arbitration decision. Parker, 248 Ill.Dec. 375, 734 N.E.2d at 85. Rather, Bill Kay's agreement that it will be bound by even an unfavorable result in arbitration is clear consideration.
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