Question: Gateway sells computers and related products by mail, Internet, and telephone. With each PC, Gateway sent a Standard Terms and Conditions Agreement including a Dispute

Gateway sells computers and related products by mail, Internet, and telephone. With each PC, Gateway sent a "Standard Terms and Conditions Agreement" including a "Dispute Resolution" clause, stating that any dispute would be settled by arbitration under the rules of the International Chamber of Commerce (ICC) in Chicago. Several buyers of computers and software from Gateway sued for breach of contract and breach of warranty, contending the company falsely stated that technical support for products was available when in fact, the plaintiffs claimed, it was almost impossible to get technical support by phone. The trial court dismissed the suit, holding that the parties had to go to arbitration. The plaintiffs appealed, contending that the arbitration clause violated UCC ยง 2-302 as an unconscionable contract because ICC rules require payment of a $4,000 advance fee when a claim is filed, of which $2,000 is nonrefundable regardless of outcome, and each plaintiff would have to bear the cost of travel to Chicago. These expenses are greater than the value of most of the products purchased. Is the arbitration clause valid under the UCC?

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The arbitration provision is unconscionable under 2302 and so is unenforceable ... View full answer

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