The Assembly is scheduled to consider A-3434 during Thursday’s voting session.
NJCJI opposes A-3434, which requires a review of consumer contract for unconscionability and sets the standard for review.
Members should note that this bill may actually be in conflict with Federal law under a U.S. Supreme Court decision handed down on April 27th, 2011 in AT&T vs. Concepcion. In that decision, the Court ruled that “[w]hen state law prohibits outright the arbitration of a particular type of claim, the FAA [Federal Arbitration Act] displaces the conflicting rule.”
We are most concerned, however, that this bill would attempt to require a court to deem an agreement to arbitrate unconscionable if the contract is standardized and not negotiated between the parties. This would encompass a large number of existing consumer contract agreement forms currently used and ultimately increase the cost to consumers of goods and services.
Further, the language in the bill seems to deem a contract unconscionable where the agreement provides for the location of the arbitration. These provisions do not fairly reflect the circumstances in which standardized consumer contracts are used, which are rarely negotiated between the parties. In reality, consumers have the choice to enter into the agreement or to walk away.
Arbitration offers as meaningful and effective a forum for resolving disputes without lawsuits, and arbitration is often less costly and faster for both parties. It has been favored in New Jersey as a fair and efficient means to resolve claims.