Question Details

Unit 2 Case Analysis Thomas Baker and others who bought new homes from Osborne Development Corp
The Case
Review the following case. Prepare an analysis that will demonstrate your ability to both answer the
questions presented and incorporate theories and concepts from this week- material.
Thomas Baker and others who bought new homes from Osborne Development Corp. sued for multiple
defects in the houses they purchased. When Osborne sold the homes, it paid for them to be in a new
home warranty program administered by Home Buyers Warranty (HBW). When the company enrolled a
home with HBW, it paid a fee and filled out a form that stated the following: “By signing below, you
acknowledge that you… CONSENT TO THE TERMS OF THESE DOCUMENTS INCLUDING THE
BINDING ARBITRATION PROVISION contained therein.” HBW then issued warranty booklets to the new
homeowners that stated: “Any and all claims disputes and controversies by or between the Homeowner,
the Builder, the Warrant Insurer and/or HBW…shall be submitted to arbitration.”
Would the new homeowners be bound by the arbitration agreement, or could they sue the builder,
Osborne, in court? (Baker v Osborne Development Corp., 159 Cal.App.4th 884,71 Cal.Rptr.3d 854 (2008)
In responding to the question be sure to:
• Discuss what courts are saying about the enforcement of arbitration clauses in contracts.
• Utilize the decision in the NCR Corp v Korala Associates, Ltd. as a basis for answer. For more
information on this case go to http://www.ca6.uscourts.gov/opinions.pdf/08a0029p-06.pdf.

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