What Are Arbitration Agreements?

A lot of contracts and forms you will sign contain something called an arbitration agreement. But what is that? Basically, it is an agreement between you and a company or other person that if you are injured or damaged in any way, you will settle your differences through an arbitrator, rather than through a court. Big companies like to use arbitration agreements for several reasons. One of those reasons is that it can be more difficult and more expensive for an individual to get a favorable result through an arbitration as opposed to the courts. There are several aspects to an arbitration agreement that we want to discuss here.

Federal Law Regarding Arbitration Agreements

There was an important law passed by congress in the early 1920s that has a big impact on both federal and state law. It is called the Federal Arbitration Act, found in 9 U.S. Code Chapter 1 et seq. The purpose of the act is to encourage and enforce the validity of arbitration agreements within contracts, even those involving personal injury. It was originally thought that the Act would provide some relief to federal courts by steering away cases to arbitration that would otherwise be heard in court. But one of the unintended consequences of the act was that parties will often fight over the validity of arbitration clauses in contracts in federal court, fights which further clog up court calendars.

As is often the case, when the act was passed its applicability to the states has been challenged. And the Supreme Court ruled that the Federal Arbitration Act is applicable to states just as it is applicable to the federal law. That means that if you sign an agreement to arbitrate a dispute, and then have a dispute, federal law requires the arbitration to be enforced under most circumstances. There are situations, however, when an arbitration clause will not be enforced. For example, an arbitration clause brought about by fraud will not be enforced.

Florida Law Regarding Arbitration Agreements

Florida's arbitration act is found in Florida Statutes Chapter 682. Under Florida law, arbitration is a favored way to resolve disputes. In addition to being favored, under the law if two people sign an agreement to arbitration, the law requires arbitration to take place. In order for the arbitration agreement to be enforced, three factors must be present:

  • the agreement has to be valid;
  • the issue must be one that arbitration can resolve; and
  • the right to arbitrate must not have been waived.

Those three elements are almost identical to the federal rules on whether an arbitration agreement will be forced on a party or not. The Florida courts have gone as far as to rule that arbitration agreements are valid in wrongful death cases. That may not sound right because a wrongful death case is brought by the survivors of someone who died. But according to the Florida Supreme Court, since survivors stand in the place of the person who died, they are bound by the contracts and claims made by the deceased during life.

Let Our Attorneys Help

Arbitration agreements are a big deal. At The Pittman Firm, we work hard to ensure that people who are injured in accidents are fairly compensated for their injuries, even when the personal injury involves an arbitration agreement. If you are injured in the Panama City area, contact us so we can help you.

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