The ‘Circle of Assent’ Doctrine and the Mandatory Pre-Dispute Arbitration Clause

Paul Bennett Marrow, Adjunct Professor of Law at New York Law School, and Craig E. Penn, Attorney at Penn & Associates, recently published The ‘Circle of Assent’ Doctrine and the Mandatory Pre-Dispute Arbitration Clause: When the Unconscionable Contract Analysis Just Won’t Do, Dispute Resolution Journal, Vol. 68, No. 3, 2013.  In their article, the authors discuss a potential alternative for dealing with a mandatory arbitration clause that denies a party’s right to due process.

Here is the abstract:

Is a mandatory arbitration clause that denies basic due process rights unconscionable? You would think so, but think again. The doctrine of unconscionability has technical elements that must be met. Courts around the country have held that the denial of a due process right doesn’t meet the test of substantive unconscionability analysis. Is this the end of the line or is there an alternative analysis that will address the unfairness of such a provision? This article urges that a little known doctrine, the Circle of Assent, found only in the state of Tennessee, is tailor made for disposing of such a term without regard for whether it is unconscionable. Rather than looking to the motivation of the draftsman, a premise that lies at the heart of an unconscionability analysis, the Circle of Assent analysis focuses on the consequences to the party against whom such a term is sought to be enforced and in doing so shifts the burden to the draftsman to establish that the term is in fact reasonable. The Circle of Assent doctrine provides a mechanism for policing terms that might not rise to the level of unconscionability but that are unfair and not worthy of enforcement, and by doing so insures that unfair mandatory arbitration clauses aren’t used to undermine the integrity of the alternative dispute resolution process.

This and other articles authored by Professor Marrow may be downloaded free of charge from the Social Science Research Network.