By Thomas G. Wolfe, J.D.
A recent court opinion by the Maryland Court of Appeals—Maryland’s highest court—illustrates that common-law contract principles can still play a pivotal role in a court’s decision to either grant or deny arbitration of an auto financing dispute, even when a state law or regulation is present in the mix.
Underscoring this point, in Ford v. Antwerpen Motorcars, Ltd., Maryland’s high court ruled that the “single document rule” of a Maryland state regulation governing vehicle sales contracts did not displace Maryland’s common-law contract principles permitting multiple documents to be “construed together as evincing the entire agreement of the parties.” Consequently, even though a car dealer’s retail installment sales contract with two consumers for the financing of their car purchase did not itself contain an arbitration provision, Maryland’s high court determined that the contract, when construed together with a “Buyer’s Order,” served to require arbitration of the consumers’ dispute with the car dealer.
By way of background, the consumers executed and signed a Buyer’s Order, setting forth the purchase price, and a Retail Installment Sales Contract (RISC), containing the financing terms of their car purchase. While the Buyer’s Order contained an arbitration clause, the RISC did not include any arbitration agreement. Still, the RISC did provide that “this contract along with all other documents signed by you in connection with the purchase of this vehicle, comprise the entire agreement between you and us affecting this purchase.”
Later, when a dispute arose with the dealership concerning their car, the consumers sought to litigate their claims under Maryland law rather than arbitrate them. In response, the car dealership asked the state trial court to compel arbitration of the dispute, based on the arbitration clause contained in the Buyer’s Order. In opposition, the consumers contended that the Maryland regulation governing vehicle sales contracts required a single “instrument in writing containing all of the agreements of the parties.” Since the RISC reflected the core agreement of the parties and contained no arbitration clause, it trumped the Buyer’s Order, the consumers maintained.
Maryland’s high court framed the issue on appeal: “Under Maryland contract law, is an arbitration provision not contained in a vehicle sales contract, but found in a Buyer’s Order executed on the same day, enforceable where the applicable Maryland regulations require vehicle sales contracts to contain all agreements of the parties?”
In ruling that the Buyer’s Order could be construed together with the RISC, the court determined that “under our long standing common law contract principles … multiple documents may be construed together as evincing the entire agreement of the parties to a vehicle sales contract.” In reaching its decision, the court emphasized that contract principles govern arbitration issues and that the language of both the RISC and the Buyer’s Order indicated an intention by the parties that they were to be “read together as constituting one transaction.”
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