Court Interprets “Loser Pays’ Provision in Consumer Contract

In a recent case (GATHER v. WALL & ASSOCIATES, INC., et al, 2017 –Ohio-765, March 2, 2017, ), the Montgomery County Ohio Court of Appeals decided that, while an arbitration provision in a consumer contract  was not “procedurally unconscionable” under the Ohio Consumer Sales Practices Act (CSPA), a “loser pays” provision requiring the losing party to pay the prevailing party’s costs, including attorney fees in such a contract , was,  because it was against public policy.

In the Ohio version of the CSPA (R.C. 1345.01 et seq), loser pays provisions are prohibited in consumer contracts. The court considered the circumstances under which the arbitration clause itself was agreed-to, and found it was enforceable. “It was not hidden in any way. It was not fine print, and was not difficult to understand. There was no evidence that the [signer] was hurried through the signing process, prevented from consulting an attorney if he desired, or prevented from negotiating any terms of the contract.” Presumably, had the court found a pattern such as the one described, it might have found the entire provision (based on the facts) unconscionable.

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