SF4289

Purpose

• This bill adds new rules about when arbitration agreements can be offered to consumers. It requires arbitration agreements to be clear, conspicuous, and presented after a consumer buys or leases a good or service. It also forbids requiring a consumer to agree to arbitration before or during the sale, and it aims to protect consumers from being forced into arbitration at the point of sale.

Definitions

• Arbitration agreement or agreement to arbitrate: a clause or contract that limits a party’s ability to resolve disputes through a court, jury trial, or class action.
• Clear and conspicuous: the standard used is the one described in section 325G.56 subdivision 3.
• Consumer: an individual who seeks or acquires a good or service by purchase or lease.

Timing of offer and separate agreement

• A person cannot require a consumer to enter into an arbitration agreement before or during the sale of a good or service.
• An arbitration agreement may be made after the sale if:
  • the agreement to arbitrate is clear and conspicuous, and
  • the agreement is separate from other general terms related to the sale of the good or service.

Void provisions and public policy

• Provisions that violate the timing rule (entering into arbitration before or during sale) are void and unenforceable.
• Any such provision that attempts to waive or ignore these requirements is also void and unenforceable because it goes against public policy.

Severability

• If any provision of an agreement violates these rules, that provision can be severed from the rest of the agreement.
• Severing the void provision does not affect the validity or enforceability of the remaining provisions.

Notable changes to existing law

• Creates a new provision in Minnesota Statutes, codifying that arbitration agreements must be entered after sale, be clear and conspicuous, and be separate from other sale terms.
• Establishes enforceability standards and severability rules to ensure that only compliant parts of an agreement remain in force.

Relevant terms - arbitration agreement - agreement to arbitrate - clear and conspicuous - consumer - sale - after the sale - before the sale - separate from other terms - void and unenforceable - public policy - severability - Minnesota Statutes chapter 325D - court - jury trial - class action - waiver of rights - general terms related to sale