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Can I require customers to sign contracts with binding arbitration clauses in Maryland? What are the requirements?

Yes, businesses in Maryland may require customers to sign contracts with binding arbitration clauses, subject to certain requirements.

Requirements for Binding Arbitration Clauses in Maryland

To require customers to sign contracts with binding arbitration clauses in Maryland, businesses must comply with the Maryland Consumer Protection Act (MCPA) [1.1]. The MCPA allows businesses to include precommitment agreements in their contracts, which require consumers to submit to arbitration for any disputes that may arise in the future between the merchant and the consumer [1.1]. However, the agreement must be on a form prescribed by the Division, and the consumer must agree to participate in the arbitration [1.1]. The agreement must also provide that it will bind the business to submit to arbitration any complaint for which mediation efforts by the Division have not been fully successful [1.1].

Dispute Resolution Process

If a dispute arises and the business has not agreed in advance to submit disputes to arbitration, either party to the dispute covered by the MCPA that is the subject of a complaint filed with the Consumer Protection Division may request arbitration, or arbitration may be suggested by the Consumer Protection Division [1.1]. The agreement to arbitrate must be signed by both parties and will be governed by the MCPA [1.1][1.2]. The arbitrator may award specific performance and damages, including consequential or incidental damages, but claims for punitive damages may not be arbitrated under any circumstances [1.2].

Conduct of the Arbitration Hearing

The arbitration hearing will be conducted outside of the court system by an impartial individual after hearing pertinent evidence and argument [1.2]. Parties to an arbitration may present their own cases or have someone represent them, and representation by an attorney is permitted but not required [1.4]. Only the parties, witnesses, counsel, and other representatives may be present at an arbitration hearing unless the parties agree that other persons may attend [1.4]. The parties have the right to testify, present other witnesses, including experts, who have knowledge relevant to the dispute, and present relevant documents for the arbitrator’s consideration [1.4]. The arbitrator has the discretion to make an inspection of the merchandise or goods which are the subject of the dispute, but are not available at the hearing, when requested by a party or whenever he/she determines that an inspection is necessary [1.4]. If the arbitrator determines that consultation with a neutral expert would assist him/her in reaching a fair decision, the arbitrator may request the Arbitration Administrator to obtain the services of an individual with the appropriate experience [1.4].

The Arbitration Award

The award in an arbitration rests solely in the discretion of the arbitrator and may not be changed by any person within the Office of the Attorney General except for a modification by the arbitrator when allowed by the Maryland Uniform Arbitration Act [1.3]. The award shall be made promptly, and the arbitrator will endeavor to make an award within 30 days of the hearing unless unusual circumstances prevent an award being made within the 30-day period [1.3]. The award shall be in writing and shall include the arbitrator’s signature, the date of the award, the specific relief awarded to the complainant, or a statement that no relief is awarded, and a statement of reasons for the award [1.3]. The arbitrator shall promptly submit the arbitration decision to the Arbitration Administrator, who will promptly deliver to the parties, by certified mail, return receipt requested, a copy of the award, along with an explanation of the parties’ rights to appeal under the Maryland Uniform Arbitration Act [1.3]. If there has not been compliance with an award and no timely appeal has been taken, the Consumer Protection Division may seek confirmation of the decision in the appropriate court [1.3].

Conclusion

In summary, businesses in Maryland may require customers to sign contracts with binding arbitration clauses, but the agreement must be on a form prescribed by the Division, and the consumer must agree to participate in the arbitration. If a dispute arises and the business has not agreed in advance to submit disputes to arbitration, either party to the dispute covered by the MCPA that is the subject of a complaint filed with the Consumer Protection Division may request arbitration, or arbitration may be suggested by the Consumer Protection Division. The agreement to arbitrate must be signed by both parties and will be governed by the MCPA. The arbitration hearing will be conducted outside of the court system by an impartial individual after hearing pertinent evidence and argument. The award in an arbitration rests solely in the discretion of the arbitrator and may not be changed by any person within the Office of the Attorney General except for a modification by the arbitrator when allowed by the Maryland Uniform Arbitration Act.

Source(s):
Jurisdiction

Maryland