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Contract trap · Any contract

Forced arbitration, no class action

All disputes go to individual binding arbitration (AAA/JAMS/NAM), appraisal or the drafter's home forum; court, jury and class actions are waived, often with a 30-day opt-out, a mandatory pre-suit notice step and mass-arbitration batching; leases and loans add confession of judgment and 'tenant/borrower pays all legal costs'; only the drafter may recover attorneys' fees.

Severity
Severe
How often it turns up
Common
Holds up?
Depends where you are
Clause phrases
24

What it looks like in a contract

Redline matches these phrases against your document verbatim. Drafters rarely invent new wording — they copy it, which is why the same sentences turn up across unrelated contracts.

In English-language contracts

  • binding individual arbitration
  • you waive your right to a jury trial
  • class action waiver
  • you may not bring a claim as a plaintiff or a class member in a class, collective, or representative action
  • American Arbitration Association
  • JAMS
  • you may opt out within 30 days
  • Notice of Dispute
  • filed in batches
  • confession of judgment
  • attorney's fees on an indemnity basis
  • Company shall be entitled to recover its attorneys' fees

In Russian-language contracts

  • все споры передаются на рассмотрение третейского суда
  • третейская оговорка
  • третейское соглашение
  • отказ от участия в коллективных (групповых) исках
  • исключительно в индивидуальном порядке
  • обязательный досудебный (претензионный) порядок
  • Арбитражный центр при РСПП
  • МКАС при ТПП РФ
  • отказывается от права на рассмотрение дела судом
  • все судебные расходы относятся на Нанимателя
  • все судебные расходы несет Исполнитель
  • решение третейского суда является окончательным и обжалованию не подлежит

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Why it bites

Small claims become uneconomic to pursue alone; streaming and app terms were invoked against physical-injury claims (Disney, Uber); opt-out deadlines are missed; confession of judgment yields a judgment without a hearing; one-way fee clauses mean you pay their lawyers if you lose and your own if you win.

Is it enforceable where you are

The same clause can be routine in one country and void in another. What follows is what the law says where you are — not advice on your particular contract.

In the US, unconscionability and the FTC Act §5 bar on unfair and deceptive practices are the general backstops; in the EU and the UK, consumer standard terms are tested under Directive 93/13 and the Consumer Rights Act 2015.

United States

Enforceable under the FAA (AT&T Mobility v. Concepcion 2011; American Express v. Italian Colors 2013; Epic Systems 2018) subject to unconscionability, notice and McGill v. Citibank (2017); CFPB 2017 arbitration rule repealed by Congress (Nov 2017); Military Lending Act bans arbitration for servicemembers; EFAA 2022 for harassment/assault claims; FTC Credit Practices Rule 16 CFR 444.2 bans consumer confession of judgment; residential confession of judgment void in most states and attorney-fee clauses made reciprocal (NY RPL 234; CA Civ. Code 1717); insurance arbitration is governed by state law (McCarran-Ferguson); mass arbitration made Valve drop its clause (Sept 2024).

  • Cited
  • 16 CFR 444.2
  • American Express v. Italian Colors
  • AT&T Mobility v. Concepcion
  • CFPB
  • FAA
  • FTC
  • McGill v. Citibank
  • Military Lending Act

European Union

93/13 Annex (q) — arbitration not covered by legal provisions, hindering legal action or shifting the burden of proof is unfair; CJEU C-168/05 Mostaza Claro (2006); Brussels I-bis Arts 18-19 (consumer sues at home; jurisdiction clauses bind only post-dispute; employees Arts 20-23); ADR Directive; B2B clauses enforced under Brussels I-bis Art 25; loi 89-462 art 4 voids tenant-pays-costs clauses.

  • Cited
  • 93/13 Annex (q)
  • C-168/05
  • loi 89-462 art 4

United Kingdom

Arbitration Act 1996 ss.89-91 — pre-dispute arbitration automatically unfair for consumer claims up to £5,000 (1999 Order), otherwise CRA 2015 Sch 2 para 20; costs are at the court's discretion and OFT/CMA treat 'all costs regardless of outcome' as unfair; FOS is free; employment tribunal claims cannot be contracted out (ERA 1996 s.203); B2B clauses enforced.

  • Cited
  • Arbitration Act 1996
  • CMA
  • CRA 2015 Sch 2 para 20
  • ERA 1996 s.203

Russia

ст. 16 п. 2 пп. 2, 11, 13 ЗоЗПП — ограничение подсудности, обязательный досудебный порядок и ограничение средств защиты ничтожны; ст. 17 ЗоЗПП; 353-ФЗ ст. 13 ч. 4 — третейское соглашение по потребительскому кредиту только после возникновения оснований для иска; 123-ФЗ — финансовый уполномоченный в силу закона (п. 93 Пленума ВС № 31/2022 для ОСАГО); судебные расходы распределяет суд (ст. 98 ГПК, ст. 110 АПК); между предпринимателями договорная подсудность и третейская оговорка допустимы (ст. 37 АПК); групповые иски — гл. 22.3 ГПК.

  • Cited
  • 123-ФЗ
  • 353-ФЗ
  • гл. 22.3
  • Пленума ВС № 31/2022
  • ст. 110 АПК
  • ст. 13 ч. 4
  • ст. 16 п. 2 пп. 2
  • ст. 17 ЗоЗПП

Where this has actually happened

Regulator actions, court rulings and the contracts they were fought over.

  • Piccolo v. Disney, Aug 2024 — motion to compel arbitration under Disney+ terms in a wrongful-death case, later withdrawn
  • Valve Steam Subscriber Agreement, Sept 2024 — arbitration clause, class waiver and fee-shifting removed after ~75,000 mass-arbitration claims
  • Nintendo Account User Agreement, May 2025 — class-action waiver with 30-day written opt-out
  • Discover Cardmember Agreement (2026): 'CLASS ACTION WAIVER. ARBITRATION MUST BE ON AN INDIVIDUAL BASIS' with a 30-day rejection right
  • OFT356 (2005) unfair examples: costs 'on an indemnity basis' and compulsory arbitration in tenancies; Wisconsin ATCP 134.08 voids tenant-pays-attorney-fees and confession-of-judgment clauses
  • Epic Systems Corp. v. Lewis (U.S. 2018) — class waivers in employment arbitration upheld

What to do

In order, from the thing that takes a minute to the thing that takes a letter.

  1. Send the written opt-out inside the window and keep proof
  2. Use small-claims carve-outs and free ombudsman routes (UK FOS
  3. RU финансовый уполномоченный, 123-ФЗ)
  4. EU/UK consumers: pre-dispute arbitration does not bind you — sue at home
  5. RU: третейская оговорка с потребителем до спора не применяется, иск по месту жительства (ст. 17 ЗоЗПП)
  6. B2B/employment: make fee recovery mutual (prevailing party), choose a neutral forum, cap arbitration costs
  7. US: consumer confession-of-judgment clauses are banned by the FTC Credit Practices Rule — report them.

Check your own document

Traps that travel with it

Drafters who use one of these usually use several.

79 traps · 1789 verbatim clause phrases