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

Requirements for Binding Arbitration Clauses in Texas

Yes, you can require customers to sign contracts with binding arbitration clauses in Texas. However, there are certain requirements that must be met in order for such clauses to be enforceable.

According to Tex. Civ. Prac. & Rem. Code § 171.002, a written agreement to arbitrate is valid and enforceable if it meets the following requirements:

• The agreement is in writing and signed by the parties;
• The agreement provides for arbitration of existing or future disputes between the parties; and
• The agreement is not unconscionable or against public policy.

Additionally, the Texas Supreme Court has held that an arbitration clause must be conspicuous and unambiguous in order to be enforceable [1]. This means that the clause must be written in a way that is clear and easy to understand, and it must be prominently displayed in the contract.

It is important to note that the enforceability of a binding arbitration clause may depend on the specific facts and circumstances of each case. Therefore, it is recommended that businesses consult with a qualified attorney to ensure that their arbitration clauses comply with all applicable laws and regulations.

[1] In re Halliburton Co., 80 S.W.3d 566, 571 (Tex. 2002).

According to Tex. Civ. Prac. & Rem. Section 172.032, an arbitration agreement must be in writing. The agreement is in writing if it is contained in: (1) a document signed by each party; (2) an exchange of letters, telexes, telegrams, or other means of telecommunication that provide a record of the agreement; or (3) an exchange of statements of claim and defense in which the existence of an agreement is alleged by one party and not denied by another. A contract reference to a document containing an arbitration clause is an arbitration agreement if the contract is in writing and the reference is sufficient to make that clause part of the contract [2].

[2] Tex. Civ. Prac. & Rem. Section 172.032.

If a written arbitration agreement is to arbitrate a controversy that exists at the time of the agreement or arises between the parties after the date of the agreement, it is valid and enforceable according to Tex. Civ. Prac. & Rem. Section 171.001 [3].

[3] Tex. Civ. Prac. & Rem. Section 171.001.

If a party shows an agreement to arbitrate and the opposing party’s refusal to arbitrate, a court shall order the parties to arbitrate according to Tex. Civ. Prac. & Rem. Section 171.021 [4].

[4] Tex. Civ. Prac. & Rem. Section 171.021.

The parties may agree on the place of arbitration according to Tex. Civ. Prac. & Rem. Section 172.106 [5].

[5] Tex. Civ. Prac. & Rem. Section 172.106.

If there is not an agreement to arbitrate, a court may stay an arbitration commenced or threatened on application and showing according to Tex. Civ. Prac. & Rem. Section 171.023 [6].

[6] Tex. Civ. Prac. & Rem. Section 171.023.

An agreement of the parties under this chapter includes any arbitration or conciliation rules referred to by that agreement according to Tex. Civ. Prac. & Rem. Section 172.033 [7].

[7] Tex. Civ. Prac. & Rem. Section 172.033.

In conclusion, you can require customers to sign contracts with binding arbitration clauses in Texas if the agreement meets the requirements mentioned above. It is recommended that businesses consult with a qualified attorney to ensure that their arbitration clauses comply with all applicable laws and regulations.

Jurisdiction

Texas

• General