Mayhall Fondren Blaize

Business litigation firms assail pending ALI contracts treatise

Louisiana and other states recognize the Restatement of the Law publications put out by the American Law Institute (ALI). For example, there are Restatements on Torts, Real Estate and other legal subjects. The courts at times will adopt a section of the Restatement as controlling in a legal dispute, or will at least cite the relevant Restatement provision as influential or supportive of the court's decision. The Restatement sections published by the ALI can therefore be important secondary sources for attorneys who are embroiled in business litigation matters.

Recently, the ALI has been working on a new publication that will attempt to state the law of consumer contracts. The project is drawing substantial fire from some business litigation attorneys and business interests because the ALI is allegedly favoring consumer interests over business interests. In addition, opponents claim that if the Restatement publishes this new subject, it will create a sudden upheaval that will see people flooding into the courts to challenge contracts to which they may be bound.

One subject area where this may be problematic, per leading business defense attorneys, is regarding the current ability of businesses to limit a consumer to an arbitration remedy rather than a court lawsuit. Such provisions often include waivers by the consumer of the right to file or participate in a class action. The proposed ALI version would make a broadside attack on that right and would emphasize the law of unconscionability as being determinative to strike down such provisions.

Essentially, this would give judges the discretion to strike down arbitration and similar consumer limitations too easily, say the defense business litigation attorneys. Those attorneys criticize the ALI for basically setting up a desired legal result and then working their way to establish that result in the relevant Restatement. Another very real consideration is the prospect that approving such a broad provision in the Restatement would invalidate untold thousands of contracts currently considered to be perfectly valid by the courts, both here in Louisiana and nationwide.

Source:, "Proposed Restatement of consumer contract law could give trial bar new weapon", W.J. Kennedy, Feb. 23, 2017

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