BLTC-9e Case Problem with Sample Answer
Chapter 12: Capacity and Legality
12–5 Case Problem with Sample Answer
Roberto Basulto and Raquel Gonzalez, who did not speak English, responded to an ad on Spanish-language television sponsored by Hialeah Automotive, LLC, which does business as Potamkin Dodge. Potamkin’s staff understood that Basulto and Gonzalez did not speak or read English and conducted the entire transaction in Spanish. They explained the English-language contract, but did not explain an accompanying arbitration agreement. This agreement limited the amount of damages that the buyers could seek in court to less than $5,000, but did not limit Potamkin’s right to pursue greater damages. Basulto and Gonzalez bought a Dodge Caravan and signed the contract, leaving parts of the contract blank. Potamkin later fi lled in a lower trade-in allowance than agreed and refused to change it. The buyers returned the van—having driven it a total of seven miles—and asked for a return of their trade-in vehicle, but it had been sold. The buyers fi led a suit in a Florida state court against Potamkin. The dealer sought arbitration. Was the arbitration agreement unconscionable? Why or why not? [Hialeah Automotive, LLC v. Basulto, 156 Fla. 92, 22 So.2d 586 (3 Dist. 2009)]
Sample Answer:
The arbitration agreement in this case was both procedurally and substantively unconscionable. Procedural unconscionability concerns the manner in which a contract is entered into. Here, the buyers did not speak or read English, and the sale was conducted in Spanish. The written contract was in English and explained in Spanish, but the accompanying arbitration agreement was not explained in any language. Having undertaken to explain the terms of the contract in Spanish, the dealer’s staff was obliged to do so accurately to give the buyers a meaningful opportunity to understand the contract and bargain. Substantive unconscionability can occur when a contract leaves one party to the agreement without a remedy for the nonperformance of the other. The contract in this case limited the buyers’ right in a court to seek relief for no more than $5,000 against the dealer. The dealer, however, had the right to seek a higher amount of damages in a court against the buyers. This made the agreement substantively unconscionable. The court refused to compel arbitration. On the dealer’s appeal, a state intermediate appellate affirmed the ruling.