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Farmer on food stamps must pay $27,000 to arbitrate
August 24, 2006 by Ross Runkel at LawMemo

Ouch. A farmer contracted to grow chickens, and then sued for fraud and wrongful termination of contract.

The contract had an arbitration clause.

The farmer said the arbitration clause was unconscionable under Georgia law because it would be too expensive for her to arbitrate.

Specifically, the farmer showed that she and her husband own no land, have no cash savings, are on Medicaid, get less than $1,000 per month from social security, and are on food stamps. Her share (one-half) of the cost of arbitration would be between $27,500 and $29,000.

One problem: As all first year law students know, the question of unconscionability is based on the situation at the time the contract was made - not later on. And the farmer put on no evidence of her financial situation at the time the contract was made.

Result: Not unconscionable. Ordered to proceed to arbitration.

Overstreet v. Contigroup Companies (5th Cir 08/23/2006).

I learned about this from Disputing: Fifth Circuit Rules on Cost as a Basis for Not Arbitrating.

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