Smith v. Katharine Gibbs School

A-5914-96T2 (N.J. Super. App. Div. 1998) (Unpublished)
  • Opinion Date: April 1, 1998

CONTRACTS; REMEDIES; ARBITRATION—A unilateral arbitration provision printed on the back of a standardized form contract is valid. Mutuality of remedy is not required.

A student entered into an enrollment agreement which contained a pre-printed clause allowing the school to unilaterally compel arbitration. When the student brought an action in the Law Division for fraud, the judge dismissed the complaint and ordered arbitration.

Citing the New Jersey Supreme Court, the Appellate Division stated that agreements requiring arbitration should be liberally construed since the public policy of New Jersey favors arbitration of commercial disputes. N.J.S. 2A:24-1 states that an arbitration clause is valid, enforceable, and irrevocable unless there are grounds at law or in equity for revocation of the contract. The Court went on to state that a unilateral arbitration clause is valid and does not violate public policy. Citing one of its prior rulings, the Court stated that “there is no inherent unfairness in enforcing a contractual clause which gives one party alone the right to compel arbitration…there is no reason why justice should require perfect symmetry of remedy.” Kalman Floor Co. v. Jos. L. Muscarelle, Inc., 196 N.J. Super. 16, 29 (App. Div. 1984). Although the common law doctrine of mutuality of remedy requires all parties to be able to elect the same remedies, the Court stated that this doctrine has been “discredited and abandoned” in New Jersey in favor of an emphasis on mutuality of obligation. Accordingly, the Appellate Division upheld enforcement of the arbitration clause.