Thursday, October 10, 2013

Lack of Consideration argument with respect to arbitration agreement

The mutual surrender of the right to trial by jury that is necessarily part of an agreement to arbitrate disputes suffices as consideration under contract law.  

Regarding any lack-of-consideration argument, it is well-settled in Texas that "[a] mutual agreement to arbitrate claims provides sufficient consideration for an arbitration agreement." Sun Fab Indus. Contracting Inc. v. Lujan, 361 S.W.3d 147, 152 (Tex. App.-El Paso 2011, no pet.) (citing In re U.S. Home Corp., 236 S.W.3d 761, 764 (Tex. 2007) (orig. proceeding) (per curiam)); see In re Tenet Healthcare, Ltd., 84 S.W.3d 760, 767 (Tex. App.-Houston [1st Dist.] 2002, orig. proceeding) (holding arbitration agreement was supported by consideration where "the parties' agreement created mutual promises by both to forego their right to a jury trial"); In re Alamo Lumber Co., 23 S.W.3d 577, 579-80 (Tex. App.-San Antonio 2000, orig. proceeding) ("Since the parties surrendered their rights to trial by jury, these mutual promises supply valid consideration.").

SOURCE: CORPUS CHRISTI COURT OF APPEALS - Nos. 13-12-00564-CV AND 13-12-00620-C  - 6/27/2013