"Standard Form" Agreements to use ADR — Does the Internet Make a Difference?

In certain industry sectors – especially the high-tech sector – the use of alternative dispute resolution (ADR) techniques has become common.   For a variety of reasons, parties often opt to avoid conventional court processes for the certainty that can flow from the use of mediation and arbitration to settle their contractual disputes. But as parties increasingly enter into contracts electronically, what are the implications for inclusion of ADR clauses in those electronically-made contracts?   Although little has been written on the topic to date, a recent article in the New Jersey Law Journal by Winters and Sweeney ("Contract Law, Arbitration Agreements and the Internet") discusses the implications.   By analogy to shrink-wrap agreements, the authors contrast the result of using a "click-wrap" agreement (where parties actively indicate assent by clicking) versus a "browse-wrap" agreement (where an agreement may arise by implication from the clicking through of information and statements, but without a positive clicking by one party to indicate assent). Vendors must be careful about requiring submission to compulsory, binding arbitration in their standard agreements in consumer sales.   In Ontario, recent amendments to the consumer protection legislation contained in the Ontario Consumer Protection Act, 2002, make such arbitration clauses invalid if they prevent the consumer from exercising a right to commence an action under the statute.  Similarly, clauses preventing consumers from commencing a class action proceeding will no longer be automatically effective, although there are still arguments available to the vendor at the certification stage.   Other provinces may follow suit. For the full text of the article, visit: http://www.law.com/jsp/article.jsp?id=1059980472260. For more information on how ADR can be used to advantage in contracts – and on the perils of using it incorrectly – contact Amy-Lynne Williams (awilliams@dww.com) or Michael Erdle (merdle@dww.com).