Arbitration Clause Enforced Even Where Provision Was Alleged To Be Illegible and Inconspicuous

Arbitration Clause Enforced Even Where Provision Was Alleged To Be Illegible and Inconspicuous

April 25, 2017

A Pennsylvania appellate court recently reversed a trial court’s refusal to enforce an arbitration provision in the parties’ contract notwithstanding arguments that the agreement was illegible. Stanley and Carol Fellerman hired Historic Home Inspection to perform a home inspection prior to purchasing a new property. The Fellermans and Historic signed a contract that included an arbitration clause and limitation of liability provision. After a utility pole on the property fell and injured Mr. Fellerman, the Fellermans filed suit against several parties, including Historic.  

Historic raised the arbitration clause as a preliminary objection in its initial response to the Fellermans’ claims, but the trial court overruled the objection and ordered the case to proceed. Historic appealed, and in a decision issued on March 30, 2017, the Pennsylvania Superior Court reversed. The court explained that under Pennsylvania law, arbitration agreements are strictly construed by their terms and that when parties have agreed to arbitrate, every reasonable effort should be made to give effect to the intentions of the parties and allow them to arbitrate their dispute unless it is clear that the dispute falls outside of the scope of the arbitration clause.

The Fellermans’ principal argument was that the arbitration provision was invalid. They argued that it would be unconscionable to enforce the provision because it was illegible and inconspicuous, so they were not put on notice of what rights (i.e. the right to a jury trial) they were waiving. The court disagreed, finding that there are no minimum conspicuity requirements to enforce a contract and the failure of the Fellermans to read the document, or to request a more legible copy, gave them no one to blame but themselves.

The Fellermans also argued that the arbitration provision was void on the basis of public policy because the agreement contained a limitation of liability provision, which limited the Fellermans’ damages to the price of inspection. The appellate court held that a home inspection contract does not involve the type of services that are so dangerous that a limitation of liability clause would automatically render the contract void. The court found that the limitation of liability clause was distinct enough from the arbitration clause that the arbitrator could sever and strike the limitation of liability provision from the contract, if necessary, and deferred further ruling on the issue.  Ultimately, the Superior Court found that the arbitration provision was enforceable and applicable, and remanded the case.

The key takeaway from the Fellerman case is a simple one: read your contracts carefully before signing, and if you have any questions, or if anything is blurry, unclear, or difficult to read—speak up!  Otherwise, you may forfeit the opportunity.

  1. See 2017 WL 1175434 (Pa.Super. March 30, 2017).