Contracts & ExecutionQuestion 652 of 1632

An $80,000 residential remodel contract contains both a binding arbitration clause and a separate mandatory mediation clause. Under B&P §7191, the MEDIATION clause must:

a.Carry the same 10-point boldface title and separate initials required for the arbitration clause
b.Be filed with the CSLB registrar before the owner signs the contract
c.Meet no special §7191 formatting rule, because that section reaches only arbitration provisions
d.Be initialed by every owner of record, including a non-signing spouse

Explanation

By its terms §7191 regulates 'a provision for arbitration of a dispute'. The special title, the 10-point roman boldface (or 8-point contrasting red), the capitalized NOTICE and the separate initials all attach to arbitration, because arbitration is what waives the owner's right to a court or jury trial, to discovery and to appeal. A mediation clause waives none of that — mediation is a non-binding settlement conference — so no §7191 formatting attaches to it. (a) is the usual misreading, treating the rule as covering any alternative-dispute clause. (b) invents a filing step; the Board does not review private contracts. (d) invents a signature rule; §7191(b) speaks of the parties to the contract, not of everyone on title.

Law Reference: Bus. & Prof. Code §7191(a)-(c)

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Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)
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