4 California Forms of Pleading and Practice--Annotated § 32.26

Summary

• [1] Possible Fraud Issues Distinguished

  Three types of fraud may be identified for purposes of analyzing when fraud is subject to arbitration:

  • •Fraud in the inception (or execution) of the contract (party never intended to enter any contract) [see § 32.20[7][b]].
  • •Fraud in the inducement of the contract as a whole (party intended to contract, but would not have done so but for other party’s misrepresentations) [see § 32.26[2]].
  • •Fraud in the inducement of the arbitration clause itself [see § 32.26[3]].

  The arbitration clause may be avoided when there is fraud in the inception or execution, that is, when the plaintiff had no intention to agree to arbitrate because the plaintiff had no intention of entering into any kind of contractual agreement at all. Arbitration may also be avoided when there is fraud in the making of the arbitration clause itself, for example, by actively concealing its existence or misrepresenting its meaning or value. However, an agreement to arbitrate may not be held ...