Tuesday, September 24, 2019

House Bill Prohibits Pre-Dispute Arbitration in Consumer Contracts



Acting against the strong objections of NAHB, the House approved the Forced Arbitration Injustice Repeal Act (H.R. 1423), legislation that would prohibit two parties from including in a contract a pre-dispute arbitration agreement. NAHB strongly supports the use of alternative dispute resolution (ADR), including binding arbitration in consumer contracts.

NAHB has found that ADR is often the most rapid, fair and cost-effective means to resolving trade disputes – for both the builder and buyer – arising out of the construction and/or sale of the home. In contrast, litigation is expensive, time consuming and unlikely to produce the desired result – getting the problem repaired.

For the home buyer, the use of arbitration also provides them with certainty that any dispute will be resolved in a quick, fair and less costly manner than litigation.

NAHB members have priced their products based on an agreed-upon contract. Because arbitration allows businesses to contain their legal costs, those savings are often included in the price of the product.

Prior to the House vote, NAHB sent a letter to House members detailing our concerns with the bill and designated opposition to the legislation as a “key vote” because of its importance to the housing community.

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