According to the U.S. Census Bureau, about one in five Florida residents speak Spanish. The percentage is even higher in South Florida, where the Census estimates upwards of 40% of the population speaks Spanish. Many South Floridians only have a basic grasp of English and that’s an important consideration for retailers and other small businesses that cater to Spanish-language populations.
The Florida Supreme Court recently decided a case that involved a conflict between Spanish-speaking customers and a South Florida car dealer. The justices reinstated a trial court’s decision to void an English-only arbitration agreement that was not properly explained to the customers. The Supreme Court also clarified the test for declaring an arbitration agreement “unconscionable” as a matter of law.
Basulto v. Hialeah Automotive
In 2004 a married couple, Robert Basulto and Raquel Gonzalez, purchased a new Dodge Caravan from a dealer in Miami Lakes. Like many South Floridians, Basulto and Gonzalez originally emigrated to the U.S. from Cuba. According to court records, the couple was “only able to communicate in Spanish.”
Basulto and Gonzalez traded their previous vehicle to the dealer in exchange for an allowance against the purchase price of the Caravan. The dealer drafted contracts, in English, to complete the sale. These contracts contained mandatory arbitration provisions in the event of a disagreement. Basulto and Gonzalez signed the contracts—which they claimed contained a number of blanks later completed by the dealer—and drove their new car off the lot.
Subsequently, the couple discovered the trade-in allowance specified in the contract was lower than the amount they had orally agreed to with the dealer. But the dealer refused to honor the oral commitment. The couple then tried to return the new vehicle and reclaim their old car, but it had already been sold.
Basulto and Gonzalez then sued the dealer under Florida law governing unfair trade practices. The dealer asked the trial judge to enforce the arbitration agreement. The judge refused, finding the agreement was “unconscionable” and unenforceable. An intermediate appeals court sided with the dealer, but the Florida Supreme Court, by a vote of 5-2, reinstated the trial judge’s original decision.
The Supreme Court supported the trial judge’s finding that no valid arbitration agreement existed between the couple and the dealer. An arbitration agreement is a contract. A contract requires a “meeting of the minds.” In this case, there was no such meeting due to the couple’s inability to communicate in English as well as their lack of understanding about arbitration clauses.
Because there was no valid contract, it was unnecessary to address the trial court’s finding the arbitration agreement was also “unconscionable.” The Supreme Court addressed the subject anyway. “When analyzing unconscionability,” the Court observed, “courts must bear in mind the bargaining power of the parties involved and the interplay between procedural and substantive unconscionability.” In other words, there’s a difference between two “sophisticated commercial enterprises” negotiating a contract with one another versus an uneducated individual purchasing a car from a dealer.
Protecting Your Business
It is essential to draft any business contract so that it will withstand judicial scrutiny. There is little point in negotiating an agreement that cannot be enforced. Whatever issues may arise, including the native languages of the parties involved, you should always work with an experienced South Florida business attorney who can advise you on the best contracting practices. Contact John S. Sarrett in Naples today if you have any questions.