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Bucci v. Four Seasons Ridgewood Sales

A-5754-06T3 (N.J. Super. App. Div. 2008) (Unpublished)

CONTRACTS; ARBITRATION — Where a homeowner never receives a written proposal and never sees a contract until after work is completed, it cannot be said that merely paying a deposit and the balance of the monies owed to a contractor constitutes agreement to an arbitration clause contained within the later-presented contract.

A homeowner, needing repairs done on a greenhouse purchased six years earlier, contacted the company that had installed the greenhouse to do those repairs. The company presented a contract spelling out the terms of the job. Aside from the price and nature of the work to be performed, the contract had an arbitration clause. It required that any claims based on the contract had to be decided by arbitration. The homeowner never signed the contract, but gave the company a deposit in the required amount and, at the end of the job, paid the remaining balance due less a small amount.

The homeowner was unhappy with the work and sued, alleging negligence, breach of contract, and consumer fraud. Before the lower court, the company argued that the arbitration provisions of the contract should have applied because the homeowner’s payments of the deposit and the balance due constituted acceptance of the contract and its terms. The homeowner testified that he never received a written proposal from the company and that he never saw a contract until after the work was completed. The lower court ruled that the making of payments by the homeowner showed that the homeowner had agreed to the contract and its arbitration clause, even though it was unsigned. Thus, it dismissed the homeowner’s claims, but without prejudice to the homeowner seeking arbitration. It also ruled that consumer fraud law precluded a consumer who refuses to sign a contract from bringing a claim based on consumer fraud law.

On appeal, the Appellate Division disagreed with the lower court’s findings and found that the homeowner’s payments of the deposit and balance did not necessarily establish that he knew about, or agreed to, the arbitration clause. It also found that there was no evidence that the company’s president ever discussed the arbitration clause with the homeowner or that he sent the contract to the homeowner. The Court also pointed out that consumers were precluded from bringing claims under consumer fraud law if the consumer induced a contractor to perform work but insisted that a contract was not necessary. Additionally, it pointed out that paying a balance did not necessarily indicate that the homeowner ever received a copy of the contract, especially in light of a letter that was sent to the homeowner that informed him of the balance due. Thus, the Court rejected the lower court’s finding that the arbitration clause applied, reversed the dismissal of the homeowner’s claims, and remanded the matter for trial.

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