& BUILDERS, INC. V. PADUCAH FEDERAL CREDIT UNION
ABRITRATION: Challenges to contract as whole vs. clause
PUBLISHED: REVERSING AND REMANDING
PANEL: VANMETER PRESIDING; CAPERTON, GUIDUGLI CONCURS
Date Rendered: 9/19/2008
In Consultants v. Paducah Federal Credit Union the Court of Appeals addresses the long standing question of arbitration challenges. If a party claims they were fraudulently induced into the contract as a whole, doesn’t that mean the arbitration clause contained therein is not valid? A resounding NO was the Court’s response. The Court’s decision, based upon Federal case law, was that the decision of whether there was fraudulent inducement to the whole contract is a decision for the arbitrator. However, if you claim you were fraudulently induced to enter into the arbitration clause, then it is a decision for the court.
Digested by Paul R. Schurman