Supreme Court: Arbitration Clause is Valid Even if Rest of Contract is Not

In a recent decision decision, the United States Supreme Court held that an arbitration clause can be valid even when the remainder of the agreement of which it is a part is not valid. In the case of Buckeye Check Cashing, Inc. v. Cardegna, the Court considered a a challenge by an individual who claimed that, because he was challenging the validity of certain terms of an agreement, that challenge must be brought in a court and not to an arbitrator. The argument was that if he was correct that the agreement was not enforceable then the arbitration clause contained in that agreement was not enforceable either. The Court disagreed, holding that a challenge to the validity of a contract as a whole, and not specifically to the arbitration clause within it, must go to the arbitrator. In short, the arbitration clause is, as a matter of law, severable. This decision once again reinforces the strength and validity of proper mandatory arbitration clauses. Many employers, public and private, include arbitration clauses in employment and other types of contracts. As always, such clauses should be reviewed by legal counsel to ensure that, even if the remainder of the contract ultimately is found invalid, the arbitration clause still survives.


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