Opinion ID: 1817898
Heading Depth: 1
Heading Rank: 8

Heading: Analysis of Auction Terms & Conditions

Text: In light of the strong presumption in both federal and state law of arbitrability, we find the Third Circuit erred as a matter of law in declaring the arbitration clause adhesionary for several reasons. First, although the arbitration agreement is in relatively small print, neither the print nor the font size of the arbitration agreement differs in any way from the other clauses in the standard form contract. Moreover, the print is not unreasonably small. We further note that the contract at issue was only a two-page document and that each paragraph was separated from the preceding and following paragraphs by what appears to be double spacing. Additionally, the arbitration provision at issue was contained in a single sentence paragraph within the section of the document labeled in capital letters ANNOUNCEMENTS. Secondly, the court of appeal erroneously found the arbitration agreement unenforceable because it was not distinguished in any way. The United States Supreme Court in Doctor's Associates, Inc. v. Casarotto, 517 U.S. 681, 687, 116 S.Ct. 1652, 134 L.Ed.2d 902 (1996), specifically found that the FAA presumption of arbitrability preempted a state statute requiring special notice requirements applicable only to arbitration agreements before an arbitration clause could be enforced. In this case, the arbitration provision, although not distinguished, was not concealed in any way, but rather was contained in a single sentence paragraph separated from the preceding and following paragraphs by double spacing. Thirdly, we disagree with the appellate court's conclusion that the contract lacked mutuality as to the arbitration agreement, and we find the arbitration clause severely limits both the defendants' and the plaintiff's right to litigate. Nowhere in the document do the defendants reserve to themselves the right to litigate any issue arising from the contract, and further, the reservation of rights contained within the DEFAULT provisions to which the appellate court took such exception, can only be invoked when the purchaser fails to comply with the Auction Terms & Conditions. According to the arbitration agreement, a finding of default must be determined through arbitration. Moreover, it does not appear that there was such a difference in bargaining positions between the parties so as to justify the application of the principle of contract of adhesion to the arbitration clause. As the dissenting judge noted, the underlying transaction, a real estate auction, does not indicate that it was such a necessary transaction to establish the plaintiff was compelled to enter it. As noted above, each party was strictly limited to arbitration for dispute resolution, and if the plaintiff did not agree with the terms of arbitration or the terms in general, he could have either attempted to negotiate the terms of the contract or refused to participate in the auction. We find the court of appeal erred in declaring the whole contract governing the terms and conditions of the auction adhesionary and lacking in mutuality. The only issue before the court was the enforceability of the arbitration clause as this matter came before the court through the defendants' motion to stay proceedings pending arbitration. The entire contract was not properly before the court, just the arbitration provisions. The merits are reserved for arbitration. The Civil Code recognizes the right of individuals to freely contract. La. Civ. Code art.1971; see also, Art. I, § 23 of the Louisiana Constitution of 1974. `Freedom of contract' signifies that parties to an agreement have the right and power to construct their own bargains. Louisiana Smoked Products, Inc. v. Savoie's Sausage and Food Products, Inc., 96-1716 (La.7/1/97), 696 So.2d 1373, 1380 ( citing Blake D. Morant, Contracts Limiting Liability: A Paradox with Tacit Solutions, 69 Tul.L.Rev. 715 (1995)). It is well settled that a party who signs a written instrument is presumed to know its contents and cannot avoid its obligations by contending that he did not read it, that he did not understand it, or that the other party failed to explain it to him. See, e.g., Tweedel v. Brasseaux, 433 So.2d 133, 137 (La.1983) (stating: The presumption is that parties are aware of the contents of writings to which they have affixed their signatures . . . The burden of proof is upon them to establish with reasonable certainty that they have been deceived. If a party can read, it behooves him to examine an instrument before signing it; and if he cannot read, it behooves him to have the instrument read to him and listen attentatively whilst this is being done.). The plaintiff in this case signed the contract acknowledg[ing] that he . . . read and [understood the] AUCTION TERMS & CONDITIONS and agree[d] to be bound thereby. The parties were free to contract to the terms which provided the defendants with the right to make announcements from the Auction Block that would take precedence over all previously printed materials or any other oral statements made or that the Auction Agreement for the Purchase and Sale of Real Estate represented the final contracted terms or even that the Auctioneer would resolve any dispute over matters at the auction and could remove a listed property from the auction at any time with the seller's direction. Moreover, there was no evidence that the plaintiff was not in an equal bargaining position as the defendants because the plaintiff could have avoided arbitration and the contractual provisions as a whole by simply not signing the agreement. After careful review of the terms of the arbitration clause, we find nothing sufficient to establish the defendants were in such a superior bargaining position as to render the plaintiff a far weaker party or the contract adhesionary, nor do we find anything in the document itself that would call into question the validity of plaintiff's consent to the terms of the agreement as indicated by his signature. The doctrine of contract of adhesion is inapplicable in this case. We now address the defendants' motion for stay pending arbitration.