Baker v. Osborne Legal Review

Thomas baker and others bought new homes from Osborne education Corp. The new homeowners later filed a cathexis against Osborne Development Corp. for multiple construction defects in the houses they purchased. The direction alleged causes of follow through for stern liability, and other breaches of scale down, and negligence. Baker and the other homeowners had along with the home purchases signed a constructor application form containing the following expression CONSENT TO THE TERMS OF THESE DOCUMENTS INCLUDING THE BINDING arbitration PROVISION contained therein. By signing the application, the homeowners were presumed to pee-pee concur to the terms of the endorsement. (Baker v. Osborne Development Corp. , 2008). The headland posed is whether the new homeowners atomic number 18 forswear by the arbitration engagement they signed, or whether they could just sue Osborne Development Corp. in court. The Fourth Appellate District of the calcium accost of Appeal answered both questions in its 2008 decision when it held that arbitration provisions in the HBW 2-10 warranty were unenforceable, because they were unconscionable. The warranty was unconscionable because the arbitration language was broad and did non all the way and unmistakably reserve the sole potency to decide whether the arbitration provision was enforceable to the arbitrator. The arbitration provision was procedurally unconscionable because it was confidential in a booklet not available when Baker executed the warranty application. It was substantively unconscionable because it was solely intended to make headway Osborne, as Osborne would have no land to sue Baker after the closedown of escrow. In NCR Corp. v. Korala Associates, Ltd., (2008), the court of Appeals weighed the issue by determining the electron orbit of the arbitration agreement based on the reason that a party should not be compelled to intermeddle a dispute which it has not agreed to arbitrate. To determine wh ether or not a case is arbitrable, the Sixth Circuit looked at the allegations in each count of the complaint to determine whether the agreement was a needful part of each claim. The standard apply by the Sixth Circuit was this whether an action could be maintained without reference to the contract or relationship issue (NCR Corp.v. Korala Associates, Ltd. , 2008, p. 4). If it could, because it is likely to be outside the scope of the arbitration agreement. Going by the Court decisions in Baker and NCR, the homeowners are not bound by the arbitration clause, and are therefore free to pursue change in a court of law. References Baker v. Osborne Development Corp. (2008) 159 Cal. App. 4th 884 Cal. Rptr. 3d NCR Corp. v. Korala Associates, Ltd. , none 06-3685, 2008 WL 140978 (6th Cir. Jan. 16, 2008)