Baker Vs Osborne Development Case Summary
Case Study: Baker v Osborne Development Corp.
LS311-01: Business Law
May 26, 2014
Case Study: Baker v Osborne Development Corp. Thomas Baker and others who purchased new homes from Osborne Development Corp. sued for multiple defects in the houses they purchased. When Osborne sold the homes, it paid for them to be in a new home warranty program administered by Home Buyers Warranty (HBW). When the company enrolled a home with HBW, Osborne paid a fee and filled out forms that stated the following: “By signing below, you acknowledge that you CONSENT TO THE TERMS OF THESE DOCUMENTS INCLUDING THE BINDING ARBITRATION PROVISION contained therein.” HBW then issued warranty booklets to the new homeowners that stated: “Any and all claims disputes and controversies by or between the Homeowner, the Builder, the Warrant Insurer and/or HBW shall be submitted to arbitration.” …show more content…
The court’s power to determine enforceability of arbitration clauses in agreements is a threshold to be decided by the court unless the parties clearly and unmistakably provide otherwise. The trial court found that the arbitration agreement was not included in the terms of any contract between the homebuyers and the builder, and that there was no evidence that the arbitration agreement was a negotiable term and appeared to be a contract adhesion (Baker v., 2013). The court found substantive unconscionably because it would be very unlikely for the builder to sue the
LS311-01: Business Law
May 26, 2014
Case Study: Baker v Osborne Development Corp. Thomas Baker and others who purchased new homes from Osborne Development Corp. sued for multiple defects in the houses they purchased. When Osborne sold the homes, it paid for them to be in a new home warranty program administered by Home Buyers Warranty (HBW). When the company enrolled a home with HBW, Osborne paid a fee and filled out forms that stated the following: “By signing below, you acknowledge that you CONSENT TO THE TERMS OF THESE DOCUMENTS INCLUDING THE BINDING ARBITRATION PROVISION contained therein.” HBW then issued warranty booklets to the new homeowners that stated: “Any and all claims disputes and controversies by or between the Homeowner, the Builder, the Warrant Insurer and/or HBW shall be submitted to arbitration.” …show more content…
The court’s power to determine enforceability of arbitration clauses in agreements is a threshold to be decided by the court unless the parties clearly and unmistakably provide otherwise. The trial court found that the arbitration agreement was not included in the terms of any contract between the homebuyers and the builder, and that there was no evidence that the arbitration agreement was a negotiable term and appeared to be a contract adhesion (Baker v., 2013). The court found substantive unconscionably because it would be very unlikely for the builder to sue the