Many contracts say disputes must be resolved by arbitration instead of in court. By agreeing, you may give up the right to sue, to a jury and to join a class action.
Where they appear
- Credit card and bank agreements.
- Cell phone, streaming and online service terms.
- Employment contracts and offer letters.
- Car loans, nursing homes and some leases.
What it can change
- Your case is decided by an arbitrator rather than a judge or jury.
- Class action waivers may prevent group lawsuits.
- Discovery and appeal rights are limited.
- You may have to pay part of the arbitration fees, depending on the rules and the clause.
Possible challenges
Courts can refuse to enforce an arbitration clause that is unconscionable or that was not agreed to, and some federal laws limit arbitration of certain claims. Small claims court may still be available in some agreements. Look for opt-out windows, which are sometimes 30 days.
What to do
- Read the dispute resolution section before you sign or click.
- Look for an opt-out instruction and follow it in writing within the deadline.
- Keep a copy of the terms at the time you signed.
- Ask a lawyer whether the clause covers your claim.
Frequently asked questions
Can I still go to small claims court?
Often yes if the clause allows it. Read the clause carefully.
Is arbitration always cheaper?
Not necessarily. Fees and costs can be significant.