How DealerXT’s Arbitration Addendum Helps Dealerships Reduce Legal Costs and Risk

When it comes to managing legal risk, one overlooked but critical detail in a dealership’s retail installment sales contract and paperwork is the Arbitration Agreement. Many dealers assume that these contracts and agreements are standard. They are not!! —

Strategic Faults and Higher Costs in Arbitration Clauses and Agreements

Some lender contracts, such as Westlake’s California 103 ARB e-contract, allow for arbitration through JAMS — an arbitration forum known for its significantly higher fees compared to alternatives like the American Arbitration Association (AAA). Upfront arbitration costs through JAMS can exceed $15,000–$20,000 per case, while AAA’s fees typically remain under $5,000.

These costs are not just a financial burden — they’re also being used by plaintiff attorneys as a strategic advantage. Increasingly, consumer lawyers are demanding JAMS arbitration, knowing the high fees may pressure dealerships into settling prematurely and/or settling for much higher amounts. Their logic is, if the dealer is forced to pay a higher arbitration cost, they will pay a higher settlement demand.

How DealerXT’s Arbitration Addendum Helps

DealerXT has introduced a new Arbitration Addendum, available now in its Forms section of the dashboard, which specifically addresses this and other issues.

Once enabled, the addendum is automatically sent to customers for electronic signature. Activation is simple: log in, click on “Forms” in the left-hand menu, and toggle “On” the Arbitration Addendum. That’s it.

Why It Matters Now

While some dealers may not have faced demands for JAMS arbitration yet, the trend is growing. Even law firms that previously used AAA — such as the Sadr Law Firm — are beginning to shift strategies to JAMS. By the time the risk becomes a direct problem, the cost to your dealership may already be significant, especially if more cases and claims are filed against you.

Need Help?

We’re offering a complimentary 15-minute call to review your current forms and assess your risk or to help you set up your system. To schedule your review, visit your dashboard or call our team at (408) 357-0237.