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Unformatted text preview: 2-7Issue:Thomas Baker filed a complaint against Osborne, alleging the homes they purchased from Osborne suffered from construction defects.Were the new homeowners bound by the arbitration agreement, or could they sue the builder, Osborne, in court? Rule:The arbitration agreement was between builder and the HBW. So Baker argued that the arbitration provision was unenforceable on the grounds that it was unconscionable.Analysis:Osborne signed the contract with HBW that did not bind the homeowners to the agreement because they were not parties to the agreement. The appeals court held the arbitration agreement to be oppression against the homeowners; hence the agreements were one-sided and not right. The homeowners were handed the warranty agreement at the time of sale on their houses, but they did not know the terms of the warranty and had no chance to look over it.Conclusion:The arbitration agreement was not binding on the homeowners, so they could sue the builder in court....
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- Spring '11