Ls311 Business Law Unit 2 Case Study

Brandi Locke
LS 311: Business Law
Unit 2 Case Analysis
July 15, 2013

The Case
Review the following case. Prepare an analysis that will demonstrate your ability to both answer the questions presented and incorporate theories and concepts from this week’s material.
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? (Baker v Osborne Development Corp., 159 Cal.App.4th 884,71 Cal.Rptr.3d 854 (2008)
  1. In responding to the question be sure to:
  2. Discuss what courts are saying about the enforcement of arbitration clauses in contracts.

When Thomas Baker and the other homebuyers purchased their properties from Osborne Development Corp., they may not have known that there were defects on the property they would have to go into arbitration for restitution.   From what I understand of the reading, Osborne Development Corp. purchased the home warranties (HBW) after the purchase of the properties they then went forward with giving the documents to the new owners.  
When it comes to the federal arbitration act which the homebuyers has signed and were told to refer to, it allows the courts to hold up any and all arbitration clauses automatically that are included...