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management and control processes, dealership’s] documents in this case leads
information security, and operational to the conclusion that they are seriously
resilience. Use of the guide is voluntary, lacking in clarity such that it is impossible
REMEMBER and the guide does not anticipate all types for [the court] to see how there was a
clear meeting of minds with respect to the
of third-party relationships and risks.
arbitration provision, and certainly not the
TO CASE(S) OF THE MONTH limitations on damages provision.” Rather
than sever the damages clause and compel
FALL BACK Arbitration Provisions in Three the parties to arbitrate, the appellate
court refused to compel arbitration,
Vehicle Purchase Documents that finding that “the arbitration provision is
Included Similar, but Not Identical, referred to inconsistently throughout the
Daylight Savings Arbitration Language, Including documents. It is impossible … to conclude

Time ends soon! Regarding Limitations on Damages, that there was a true meeting of the minds
Were Inconsistent and Unclear and with respect to the exact terms of the
The time change Thus Not Enforceable by Dealership: arbitration.” See Green v. Frazier, 2021 Ky.
A dealership’s sales agent told a car App. LEXIS 80 (Ky. App. July 9, 2021).
will happen at buyer that the car was new with no prior
2 a.m. on damage. As part of the purchase, the COMPLIANCE
buyer signed a purchase contract, an
Sunday, Nov. 7. addendum, and an acknowledgement of TIP
terms of sale. The documents contained
similar, but not identical, arbitration Our Case of the Month highlights how this
provisions. The buyer later learned that dealership failed in its arbitration battle
his vehicle had been damaged before he with the consumer and how the court
bought it. He sued the dealership and the concluded there was no true “meeting of
sales agent in connection with the alleged the minds” with respect to the terms of
misrepresentation of the condition of the arbitration. The arbitration terms in the
car. The defendants moved to, among three vehicle purchase documents were
other things, compel arbitration. The trial similar, but not identical, and the court
court denied the motion, finding that the found that this lack of clarity among the
arbitration provision in the addendum various provisions meant there was no
was substantively unconscionable agreement on the terms of arbitration.
because it limited the parties’ rights We still see this issue pop up in some deal
to recover consequential and punitive jackets we review. Read the documents
damages. The Court of Appeals of you’re asking your buyers to sign – do you
Kentucky affirmed. The appellate court have them sign two different arbitration
noted that “a consumer contract which agreements or provisions? What do the
seeks to exclude damages that would terms of the arbitration agreements or
otherwise be available to the buyer, provisions say? If the arbitration terms in
such as those falling within Kentucky’s your documents aren’t the same or if they
Consumer Protection Act, must do so conflict, it’s time for a legal checkup!
clearly, concisely, and noticeably such that
there can be no doubt that the consumer So, there’s this month’s roundup! Stay
understands the rights he is giving up legal, and we’ll see you next month. n
by signing the contract.” The appellate
court noted that the purchase contract Eric (ejohnson@hudco.com) is a Partner
does not contain a clause restricting in the law firm of Hudson Cook, LLP,
or limiting consequential or punitive Editor in Chief of CounselorLibrary.com’s
damages. The addendum restricts the Spot Delivery , a monthly legal newsletter
®
arbitrator from awarding either party for auto dealers and a contributing
consequential or punitive damages. The author to the F&I Legal Desk Book. For
acknowledgement omits any reference information, visit www.counselorlibrary.
to the limitations on damages provision com. CounselorLibrary.com 2021, all
©
contained in the addendum. According rights reserved. Single publication rights
to the appellate court, “[t]aken in only to the Association. HC# 4814-2567-
their totality, an examination of [the 1161

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