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SHOWMETHEMONEY CHECK CASHERS v. WILLIAMS9/21/2000
dictions do not restrict the scope of arbitration as we do in this state. Under Arkansas law, certain matters are not arbitrable, regardless of the language used in an arbitration agreement. Terminix Int'l Co., supra. Generally, the scope of arbitration is defined by the contract between the parties, see Anthony, supra, and the Act contemplates that the courts will effectuate this agreement.
[5, 6] The preliminary issue in this case is whether the subject language constitutes a valid contract to arbitrate. Showme stated during oral argument that it contended that the relationship between the parties consisted of three separate contracts. One of those contracts was an agreement to arbitrate. Again, the same rules of construction and interpretation apply to arbitration agreements as apply to agreements generally. May Constr. Co., Inc. v. Benton Sch. Dist. No. 8, supra. The essential elements of a contract are (1) competent parties, (2) subject matter, (3) legal consideration, (4)
mutual agreement, and (5) mutual obligations. Foundation Telecommunications v. Moe Studio, 341 Ark. 231, 16 S.W.3d 531 (2000); Hunt v. McIlroy Bank & Trust, 2 Ark. App. 87, 616 S.W.2d 759 (1981). Of particular importance to this case is the element of mutuality of obligations. The concept of "mutual obligations" has been explained by this court as follows:
A contract to be enforceable must impose mutual obligations on both of the parties thereto. The contract is based upon the mutual promises made by the parties; and if the promise made by either does not by its terms fix a real liability upon one party, then such promise does not form a consideration for the promise of the other party." . . . utuality of contract means that an obligation must rest on each party to do or permit to be done something in consideration of the act or promise of the other; that is, neither party is bound unless both are bound." A contract, therefore, which leaves it entirely optional with one of the parties as to whether or not he will perform his promise would not be binding on the other.
Townsend v. Standard Indus., Inc., 235 Ark. 951, 954-955, 363 S.W.2d 535, 537 (1963) (quoting El Dorado Ice & Planing Mill Co. v. Kinard, 96 Ark. 184, 131 S.W. 460 (1910) (citations omitted)). Mutual promises that constitute consideration for each other are the classic method of satisfying the doctrine of mutuality. Odom Antennas, Inc. v. Stevens, 61 Ark. App. 182, 966 S.W.2d 279 (1998) (citing J.L. McEntire & Sons, Inc. v. Hart Cotton Co., 256 Ark. 937, 511 S.W.2d 179 (1974)).
Our courts have never specifically addressed the question of mutuality in an arbitration contract. However, construing similar language, several federal courts have found that lack of mutuality to arbitrate in arbitration clauses renders the clauses void as to the bound party. In Hull v. Norcom, Inc., 750 F.2d 1547 (11th Cir. 1985), the Court of Appeals determined that New York law required mutual obligations to arbitrate to render the clause valid. In Hull, the arbitration agreement only required one of the parties to submit to arbitration, while the other party did not have to. The Court of Appeals found that this rendered the provision invalid because there was no mutuality of consideration. In Gibson v. Neighborhood Health Clinics, Inc., 121 F.3d 1126 (7th Cir. 1997), the Court of Appeals determined that Indiana law required the same, and also concluded that it could not find other consideration in the contract
to balance one parties' obligation to arbitrate where the other party was not required to. The opposite conclusion was found, however, in Design Benefit Plans, Inc. v. Enright, 940 F. Supp. 200 (N.D.Ill. 1996), whe
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