Supreme Court Upholds Contract Law

Supreme Court Upholds Contract LawIn the course of running a business, contracts will need to be signed.  Contracts provide the framework for all businesses because it commits two parties to an exchange of money for goods or services.  Without contracts, nothing would be certain for any business.

Sometimes, these contracts include clauses that can waive your rights to a trial but instead opt for alternate dispute resolution.  This keeps legal matters out of court and instead tries to find the middle ground between the two sides.  A recent Supreme Court decision has made it even more difficult to bring class action lawsuits against big companies.

On June 20th, the highest court decided that arbitration clauses are a matter of contract and nothing else can change that.  The decision was based on a lawsuit of Italian Colors Restaurant v. American Express Co.  The restaurant felt that the terms of their contract with the credit card company was unfair.  Specifically that AMEX charged higher fees than other cards.  When the restaurant sued AMEX in a class action lawsuit at the state level, they won.

The appeal by AMEX was granted by the Supreme Court.  The decision was based on the fact that Italian Colors signed a contract that waived their right to a trial by jury.  The result that this will have on small businesses will be felt deeply.

Now, small companies cannot receive larger settlements associated with class action lawsuits.   Alan Carlson, Italian Colors chef and co-owner said after the decision that “this was another big blow for small businesses, and now the corporate giants can do whatever they want.  Big businesses know it will cost you a fortune to litigate against them, so no one will bother to spend $250,000 to collect $50.”

Contracts have far reaching financial consequences.  Legal counsel can protect your business from falling into a similar problem.  Contact an experienced business law attorney in Chicago who can review contracts before you sign them or any other needs you might have.