California  |  Insurance Law

Legal Question

Asked on: 4/22/13, 9:39 am

If you sign a contract based on fraudulent information (constructive fraud), is the arbitration clause of the contract still enforceable?

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1 Answer

Answered on: 4/22/13, 1:25 pm by Timothy McCormick

Ah, a fine and very difficult question. The answer will be determined entirely on the facts and details of the particular situation, including the terms of the contract and the nature of the fraud. The two key questions would be whether the contract is void or voidable, and whether the fraud went to the agreement to arbitrate or is extrinsic to that agreement. The only way you can know the real answer to your question is to take all the facts and documents to a lawyer for review. Even then though, since this is a tricky area of the law, another lawyer could come to a different conclusion. So the only absolute certainty is if a judge rules on it. Also, you should just bear in mind that there is a public policy favoring upholding arbitration clauses. So you start from a presumption that it is valid.

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