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Cuckoo for Arbitration?

Cuckoo for Arbitration?

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Guest Post by the Digital Law Group
Digital Law Group provides business-critical legal services to innovative start-ups and growth companies – from invention to commercialization.

As you may have heard, General Mills recently added (then deleted) an arbitration provision to its online Legal Terms.  The provision required consumers to arbitrate legal disputes with General Mills rather than take them to court, but did not specify what types of disputes the provision referred to.  Speculation that downloading an online coupon could prevent a consumer from suing the company for choking on cheerios (among other possible food related injuries) led to quite the public outcry.

After tasting the wrath of cereal eaters nationwide, General Mills succumbed to public pressure and removed the provision, but should they have?  The law says corporations can avoid class action suits by using arbitration language, and many do.  Perhaps the issue here is that no one ever reads the Terms of Use on a site before clicking “accept”.  If they did, consumers would know that arbitration provisions are commonplace in many industries.  But let’s face it, arbitration is not intended to benefit the consumer in these cases; rather, it is to protect the company by limiting the legal remedies of the consumer.

An arbitration provision in your agreements can save your company time, legal fees and unwanted publicity down the road; however, you should weigh the pros and cons of arbitration before deciding to include it in your terms.  Here are some things to consider:


  • o Generally simpler and more efficient than litigation
  • o Private proceeding
  • o Can select an arbitrator who is knowledgeable in the subject area


  • o Binding arbitration cannot be appealed
  • o No automatic right to discovery
  • o Relaxed procedural rules can lead to unpredictable outcomes