Will Ari likely be bound by the arbitration provision that he can only receive $150 in damages?

A) Yes, he signed the agreement.
B) He will likely be bound only if the company can show that it has not made a substantial profit in the past 12 months.
C) If an arbitration award on that basis is appealed, a federal district judge would likely find the provision unenforceable.
D) He can avoid the provision if he testifies that he did not read it before signing the agreement.
E) He will likely be bound unless he can show that the company made a misrepresentation to him.

Question

Jerome Hutcheson · Accepted Answer

Final Answer : C, Explanation :  The provision limiting damages to $150, especially in the context of a dispute involving significant potential damages, is likely to be considered unconscionable or overly harsh, making it unenforceable by a federal district judge upon appeal. Arbitration agreements are subject to review for fairness and cannot enforce terms that grossly disadvantage one party, especially in cases where the terms prevent reasonable compensation for damages.

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