Terms Of Use Arbitration Clause for the United States

Terms Of Use Arbitration Clause Template for United States

A Terms of Use Arbitration Clause is a legal provision within website terms of use that requires disputes between users and the platform to be resolved through arbitration rather than court litigation. Under U.S. law, it establishes the framework for dispute resolution, including the scope of arbitrable matters, procedure selection, cost allocation, and any class action waivers. This clause is enforceable under the Federal Arbitration Act and must comply with both federal and state-specific requirements for online agreements.

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What is a Terms Of Use Arbitration Clause?

The Terms of Use Arbitration Clause is essential for online platforms operating in the United States to manage dispute resolution efficiently and cost-effectively. This clause becomes necessary when businesses want to avoid costly court litigation and ensure consistent dispute resolution procedures across their user base. It must comply with the Federal Arbitration Act, state laws, and recent Supreme Court precedents. The clause typically includes provisions for arbitration procedures, cost allocation, scope of covered disputes, and often includes class action waivers. Recent legal developments have made such clauses increasingly important for online businesses, particularly following key Supreme Court decisions supporting their enforceability.

What sections should be included in a Terms Of Use Arbitration Clause?

1. Agreement to Arbitrate: Core provision establishing mutual agreement to arbitrate disputes

2. Scope of Arbitration: Defines what disputes are covered by the arbitration agreement, including types of claims and timeline

3. Arbitration Procedures: Specifies the rules and procedures for conducting arbitration, including selection of arbitrator and venue

4. Notice Requirements: Details how and when notice of arbitration must be given

5. Costs and Fees: Allocation of arbitration costs between parties, including filing fees and arbitrator compensation

6. Governing Law: Specifies that Federal Arbitration Act and applicable state laws govern the agreement

What sections are optional to include in a Terms Of Use Arbitration Clause?

1. Class Action Waiver: Waiver of right to participate in class actions, used when dealing with consumer agreements

2. Small Claims Exception: Allows parties to pursue small claims court actions, recommended for consumer-facing agreements

3. Opt-Out Provision: Gives users right to opt out of arbitration within specified timeframe, recommended for consumer fairness

4. Severability Clause: Ensures that if any part of the arbitration agreement is found invalid, the rest remains enforceable

5. Emergency Relief: Provision allowing parties to seek emergency injunctive relief from courts when necessary

What schedules should be included in a Terms Of Use Arbitration Clause?

1. Arbitration Rules: Detailed procedures from chosen arbitration organization (e.g., AAA, JAMS)

2. Fee Schedule: Detailed breakdown of arbitration costs and fee allocation

3. Opt-Out Form: Standard form for users to opt out of arbitration agreement if opt-out provision is included

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

United States

Publisher

Genie AI

Cost

Free to use
Industries

Federal Arbitration Act (FAA): Primary federal law that governs arbitration agreements in the United States, establishing the enforceability of arbitration clauses in contracts involving commerce

E-SIGN Act: Federal law governing electronic signatures and records, crucial for online terms of use and arbitration agreements

AT&T Mobility v. Concepcion: Supreme Court decision upholding the enforceability of class action waivers in arbitration agreements

American Express Co. v. Italian Colors Restaurant: Supreme Court case reinforcing the enforceability of arbitration agreements even when the cost of individual arbitration exceeds potential recovery

Epic Systems Corp. v. Lewis: Supreme Court ruling confirming the enforceability of individual arbitration provisions in employment contracts

State Arbitration Laws: Various state-specific laws that may affect arbitration agreements and must be considered alongside federal law

State Contract Formation Requirements: State-specific rules governing how contracts must be formed and presented to be legally binding

State Consumer Protection Laws: State-level laws designed to protect consumers, which may impact the enforceability of arbitration clauses

Unconscionability Doctrine: Legal principle that prevents enforcement of contracts that are unfairly one-sided or oppressive

Notice Requirements: Legal requirements for providing adequate notice of arbitration terms to users

Mutual Assent Principles: Legal requirement that all parties must demonstrate agreement to the contract terms

Clear and Conspicuous Disclosure: Requirement that arbitration terms must be prominently displayed and clearly communicated to users

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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