I hired a general contractor for a complete over-hall of a fixer-upper house I purchased in September 2012. The contractor has clearly violated NJ's Consumer Fraud Act by not notifying me of a significant delay discovered in December (I found out in April), by not providing me with written change orders (and making them anyway; the kitchen budget, for example, went from ~$10K to ~$2.5K), and by requesting that I sign a certificate of completion while the project is still incomplete to this date.
The contract we signed was furnished by my lender (the renovations are being paid for through a 203k loan made through a national bank). There is a binding arbitration clause in the contract which, I think, would prevent the contractor from being penalized by NJ's Consumer Fraud Act (I wasn't aware of the act until I started researching what recourse I had; otherwise, I wouldn't have agreed to the clause).
As the contractor claims he has dealt with me in good faith, I think the treble penalty would help him work more consciously in the future.
Is there any way to get around or void the arbitration clause? I'm wondering, for example, if one of the following arguments would be sufficient:
invalid contract argument
- NJSA 56:8-151 requires home improvement contracts to contain 3 day cancellation notice
- Contract does not contain 3 day cancellation notice
- Contract is null & void
unconscionable clause argument
- NJ Consumer Fraud Act was created to deter unscrupulous behavior, through heavy penalization
- Binding Arbitration Clause relieves contractor of NJ Consumer Fraud Actís heavy deterrent
- general contractors have a reputation for unscrupulous behavior
- a reasonable person is cautious of general contractors
- a reasonable person would not relieve a general contractor of a heavy deterrent of unscrupulous behavior
- a reasonable person with the knowledge of the NJ Consumer Fraud Act would not have agreed to Binding Arbitration Clause
- Binding Arbitration Clause is unconscionable
- Binding Arbitration Clause is void
Thanks for any help/insight before I seek to retain a lawyer.
1 Answer from Attorneys
Arbitration is no impediment to application of the NJ Consumer Fraud Act. I handle construction litigation on a regular basis. If I can be of further help to you, call or email.
See also: http://info.corbettlaw.net/lawguru.htm
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