Thomas Baker and others who bought new homes from Osborne Development Corp. sued for multiple defects in the houses they purchased. When Osborne sold the homes, it paid for them to be in a new home warranty program administered by Home Buyers Warranty (HBW). When the company enrolled a home with HBW, it paid a fee and filled out a form that stated the following: “By signing below, you acknowledge that you… CONSENT TO THE TERMS OF THESE DOCUMENTS INCLUDING THE BINDING ARBITRATION PROVISION contained therein.” HBW then issued warranty booklets to the new homeowners that stated: “Any and all claims disputes and controversies by or between the Homeowner, the Builder, the Warrant Insurer and/or HBW…shall be submitted to arbitration.”
Would the new homeowners be bound by the arbitration agreement, or could they sue the builder, Osborne, in court?
In case of Thomas Barker and others they entered into an agreement to an agreement which stated that all claims, disputes and controversies by or between Homeowner, the builder, the warranty insurer or HBW shall be submitted to arbitration. So the claims made by Thomas Barker and others fall within the substantive scope of the agreement. In other words the court will compel arbitration.

In case of Baker v Osborne Development Corp, there was a purchase contract that did not contain any arbitration clause, however, there was documentation accompanying an express warranty on the home that contained an arbitration agreement. Baker sued Osborne for breach of warranties, breach of contract, and negligence. Osborne moved to compel arbitration. The trial court turned down the motion on the grounds of "unconscionability"; however, the appeal court examined the question of unconscionability to the arbitrator. The court found that the arbitration agreement did not clearly and unmistakably reserve to the arbitrator the issue of whether the arbitration agreement was enforceable.

In case of Thomas Barker and other there...