Arbitration agreements, whether they are separate or part of a larger agreement, are contracts – an enforceable set of promises between parties. Like any other contract, arbitration agreements are subject to the same defenses that may be used to invalidate a purported contract. Such defenses may include:
- Mistake (Mutual or Unilateral);
- Duress or Undue Influence;
- Lack of Capacity;
- Misrepresentation or Fraud;
- Impossibility or Impracticability (yes, there is a difference);
- Material Breach (after formation);
- No Consideration; and
- Several Others.
There are no special defenses to arbitration agreements. The U.S. Supreme Court has recently affirmed this rule under the Federal Arbitration Act.
If you think you may have agreed to arbitrate a dispute, don’t try anything special or unique to attack the arbitration agreement or provision. Stick with the tried and true contractual defenses.
Better yet . . . stick with arbitration, it may be better for you.