Equitable Estoppel, Contracts, and Arbitration

When a husband signs an agreement to arbitrate disputes over a motor vehicle but his wife doesn’t, can the wife be forced to arbitrate? In Snyder v. Jack Schmitt Ford, 2022 IL App (5th) 210413-U (April 21, 2022), the appellate court said no. The elements of a normal estoppel claim are that one party by statements or conduct induced a second party to reasonably rely on them, to its, his, or her detriment. In this case, defendants contended that International Paper Co. v. Schwabedissen Maschinen & Anlagen, 206 F.3d 411 (4th Cir. 2000), and In re Weekley Homes L.P., 180 S.W.3d 127 (Tex. 2005), estops a party from “asserting that the lack of his signature on a written contract precludes enforcement of the contract’s arbitration clause when he has consistently maintained that other provisions of the same contract should be enforced to benefit him.” In the latter case, the court noted that “A nonparty cannot have his contract and defeat it too.” But this broader view of estoppel relates to a benefit contained within the contract, not an indirect benefit that results from the contract’s formation. The wife’s potential indirect benefit resulted from her relationship with her husband. Her claims were in tort based on actions in taken at her home and false statements made by defendant about her to her husband’s employer. To require her to arbitrate those disputes would undermine the policy that a party cannot be compelled to arbitrate a matter without its agreement.

For more information about breach of contract actions, equitable estoppel, or arbitration, contact Thomas Patterson at tpatterson@pattersonlawfirm.com.

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