The Impact of Mandatory Arbitration on the Common Law Regulation of Standard Terms in Consumer Contracts

Abstract

The doctrines of unconscionability and good faith have played para- mount roles in limiting the ability of businesses to impose unfair contract terms on consumers. Yet the continuing role of these doctrines is being threatened by the proliferation of mandatory arbitration provisions in con- sumer agreements. If this trend continues, the ability of courts to further de- velop these contract doctrines in consumer cases will be severely limited. The Essay begins with a discussion of the role that common law plays in regulating consumer contract terms and discusses how the unconscionability and good faith doctrines have evolved as limitations on unfair standard terms over the years. It then reviews the increasing use of mandatory arbitration clauses in consumer contracts and the likely effects of this trend on consumer contract litigation. The Essay concludes by exploring what this might mean going for- ward if the common law of unconscionability and good faith are essentially frozen in time, and if mandatory arbitration results in fewer published deci- sions interpreting and applying consumer statutes.