"I Agreed to What?" — A Reminder About the Enforceability of Arbitration Clauses
As 2023 drew to a close, a federal court in North Carolina issued a decision that reaffirmed a principle often litigated in consumer and employment disputes: arbitration agreements are enforceable—even when they appear in places that may be overlooked by the average signatory. The decision in Surgeon v. Warehouse Home Furnishings Distributors highlights the continuing judicial willingness to uphold arbitration clauses embedded in contracts, particularly when those agreements are referenced on the face of the document.
While the ruling may not break new legal ground, it sends a clear message: parties entering into written contracts are expected to read—and are bound by—all incorporated terms, even those found on the reverse side of a document. Arguments based on not having noticed or read the arbitration provision are unlikely to carry the day.
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The Case: Surgeon v. Warehouse Home Furnishings Distributors
The plaintiff, Surgeon, filed suit against Warehouse Home Furnishings Distributors, disputing the applicability of an arbitration clause contained in a double-sided installment contract. Surgeon acknowledged signing the front of the agreement but claimed that he was not aware of, nor did he explicitly agree to, the arbitration provision printed on the reverse side.
Warehouse responded by filing a Motion to Compel Arbitration, citing the binding nature of the agreement as written. U.S. District Judge Max O. Cogburn Jr. granted the motion, siding with the defendant and compelling arbitration.
At the heart of the dispute was whether a contract signatory can be bound by terms located on the back side of a document, particularly when those terms include an agreement to arbitrate and a waiver of jury trial rights.
Incorporation by Reference: A Binding Practice Under North Carolina Law
The court rejected the plaintiff’s arguments that the arbitration clause was unenforceable because he had not read or seen the reverse side of the agreement. Judge Cogburn pointed to a longstanding principle in North Carolina contract law: incorporation by reference is a valid and enforceable mechanism—provided that the front of the agreement clearly notifies the signatory that additional terms are incorporated into the deal.
The decision emphasized that a party’s constructive notice—i.e., the legal presumption that a person is bound by terms they could have read—was sufficient to create a binding agreement. The court explained:
“Incorporation by reference is acceptable in North Carolina even if reading the additional terms requires an extra step by the signor.”
Because the front side of the installment contract included a disclaimer that additional terms—specifically an arbitration clause and a jury trial waiver—were incorporated by reference, the court found that Surgeon was bound by those provisions, even if he had not read or reviewed the reverse side.
Constructive Notice vs. Actual Knowledge
One of the most common objections raised by consumers or employees seeking to avoid arbitration is that they did not recall seeing or agreeing to an arbitration clause. Courts have consistently held that actual knowledge is not required when the terms are reasonably disclosed. In this case, the court reaffirmed that principle.
Constructive notice arises when a person is given the opportunity to review the terms of an agreement—even if they choose not to. When the front of a contract references additional provisions on the back, and those additional terms are not hidden or contradicted, the law generally holds the signatory accountable.
As Judge Cogburn’s opinion illustrates, simply claiming not to have seen the clause—or not understanding its significance—is not enough to escape the consequences of the agreement.
Practical Implications for Businesses
The Surgeon decision serves as a reminder that arbitration agreements can and will be enforced when properly disclosed—even if they are presented in somewhat indirect ways. Businesses using physical or electronic contracts should ensure that:
Front-facing disclaimers are clear and unambiguous
If arbitration provisions are placed on the reverse side or in a linked document (in the case of digital contracts), there should be clear language on the front side referencing them.Important provisions are not buried
Courts are more likely to enforce clauses that are presented in a conspicuous manner. Font size, location, and bold or italicized text can all affect enforceability.Signatures are obtained on documents that include disclosure language
Even in consumer transactions, courts have little sympathy for signatories who argue that they failed to read the contract—so long as the agreement reasonably directs them to the relevant terms.
This case reinforces the importance of clarity and structure in contract drafting. Businesses seeking to avoid protracted litigation must build arbitration agreements that not only protect them substantively but withstand procedural scrutiny.
What Consumers Should Know
For consumers, this case highlights a simple but often overlooked reality: signing a contract usually means agreeing to all of its terms—even those not immediately visible. Whether printed on the back, linked in a separate document, or referenced in a terms-and-conditions page, incorporated terms are legally binding.
That includes arbitration provisions, jury trial waivers, and class action waivers. These clauses can fundamentally change the forum, scope, and strategy of a potential dispute.
Consumers who wish to understand their rights and obligations should:
Take time to review all parts of a contract, especially when told that additional terms are included elsewhere
Ask for a complete copy of any agreement before signing—front and back, or in digital form
Know that silence or failure to read a term will not usually relieve them of the obligation to follow it
Broader Arbitration Trends: Enforceability Remains Strong
The Surgeon case adds to a growing body of case law affirming that arbitration clauses are enforceable—even when challenged on technical or procedural grounds. Courts across the country have shown a consistent willingness to uphold such provisions, provided they are:
Disclosed in a manner consistent with state contract law
Not unconscionable or deceptive
Agreed to via signature, acknowledgment, or proper notice
The Federal Arbitration Act (FAA) continues to provide a strong policy backdrop in favor of arbitration. While some challenges succeed—particularly when companies are careless in presenting or structuring their agreements—courts generally lean toward enforcement when the contractual language is clear and the procedural requirements are met.
Unlocking Solutions Through Clear, Enforceable Agreements
Arbitration remains a powerful tool for resolving disputes efficiently and cost-effectively—but only when the agreement is enforceable. The decision in Surgeon v. Warehouse Home Furnishings Distributors is a strong reminder that procedural details matter. Clarity in drafting, transparency in disclosure, and precision in contract structure are all critical to ensuring that an arbitration clause will be upheld.
At Nationwide ADR, the approach to arbitration goes beyond facilitation—it includes insight into enforceability, clarity of procedure, and alignment with applicable state and federal law. Whether resolving consumer disputes, employment matters, or complex commercial claims, Nationwide ADR is committed to Unlocking Solutions for Demanding Cases.
To learn more about arbitration, enforceability, or structuring neutral-driven resolution, visit NationwideADR.com.