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Arbitration Clause in Inspection Agreement


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Many of us have an arbitration clause in our PIA. Mine states that disputes will be settled under the rules & procedures of Construction Arbitration Services, Inc. I learned last week that this company has gone out of business and therefore the arbitration clause in my PIA is not valid. A lawyer (at the STL ASHI fall conference) stated that an arbitration clause must state who will be the arbitrator.

So my question is what arbitration company / body / group / rules does your PIA indicate.

I know there is AAA (American Arbitration Association) and that they are very expensive.

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The only one that wins in arbitration is the arbitrator. Why not go to court where you at least have a chance of winning?

I have no experience is being sued or going to arbritation. So I've just gone with what I've been told - arbritration is prefered. I've been told it is much more expensive to defend yourself against frivolous law suits then in arbritration. How does your PIA address the issue?

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Glassford v. BrickKicker and GDM Home Services, Inc. (2009-362) (04-Nov-2011)

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Tuesday, November 8, 2011

Limitation of liability; liquidated damages; exculpatory clause; arbitration. Divided court rejects as unconscionable a limitation of liability clause and an arbitration clause in home inspection contract.

Glassford v. BrickKicker and GDM Home Services, Inc. (2009-362) (04-Nov-2011) 2011 VT 118 (Skoglund, J ) (Dooley, J., concurring and dissenting.) (Burgess, J., joined by Chief Justice Reiber, concurring and dissenting).

Plaintiffs, who brought suit to obtain compensation for an allegedly negligent home inspection, appeal the superior court?s order granting summary judgment in favor of the home inspector based on the terms of a binding arbitration agreement in the parties? contract. At issue is whether the superior court erred in rejecting plaintiffs? contention that the terms of the home inspection contract are unconscionable under the common law. The contract limited defendant?s liability to no more than the $285 charged for its inspection. Yet homebuyer would have to pay, at minimum, a $1350 arbitration fee to recover no more than the $285 inspection fee. We find unconscionable the contractual provisions limiting liability to the cost of the inspection and yet requiring arbitration that would necessarily cost more than the amount of the liability limit. Because the limited liability and arbitration provisions are interconnected in creating the substantively unconscionable illusory remedy, we strike both of them, notwithstanding the contract?s boilerplate severability clause. Accordingly, we reverse the superior court?s decision and remand the matter for further proceedings consistent with this opinion.

Read the rest here

http://scovt.blogspot.com/2011/11/limit ... dated.html

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I read the Court opinion and the most remarkable thing in that essay is that the inspector isn't charging enough to cover his franchise fees, let alone earn a living.

Like I said before, the arbitrator wins. He gets $1350 to listen to you and your client bitch. Then you get dinged for a couple grand, and your client has to eat the rest. You each leave angry at the other when you should be mad at the arbitrator. Most folk could have come to the same agreement without him. The rest go to court.

In the end it doesn't really matter. All the dispute resolution processes, liability limits, and whatever else we want to throw in our PIAs, are as useful as door locks - they keep honest people honest. After that, it comes down to who has the better lawyer.

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