Fairfield Leasing v. Techni-Graphics
607 A.2d 703, 256 N.J. Super. 538 (1992)
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Rule of Law:
A jury trial waiver in a standardized contract of adhesion is unenforceable as a matter of public policy when the clause is inconspicuous, the contract was not negotiated, and the signing party was not represented by counsel.
Facts:
- On January 30, 1991, Techni-Graphics, Inc. (TGI), through its guarantor Robin Umstead, entered into a 39-month lease agreement with U-Vend, Inc. for a coffee machine.
- The agreement was a standardized form contract prepared by U-Vend, containing 23 paragraphs of single-spaced text in very small font.
- The contract contained a jury waiver clause buried in the last part of the twenty-second paragraph, and also within a 25-line paragraph in the guarantee.
- U-Vend subsequently assigned the lease contract to Fairfield Leasing Corporation (FLC).
- TGI discovered that the coffee machine was defective and infested with cockroach larvae.
- After U-Vend refused to remedy the situation, TGI stopped making its monthly rental payments to FLC.
Procedural Posture:
- Fairfield Leasing Corporation (FLC) filed a complaint against Techni-Graphics, Inc. (TGI) and Robin Umstead in the Superior Court of New Jersey, Law Division, for breach of contract.
- TGI and Umstead filed a third-party complaint against U-Vend, Inc.
- TGI made a demand for a trial by jury on all issues.
- FLC and U-Vend filed a joint motion with the trial court to strike TGI's jury demand based on the waiver clause in the lease agreement.
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Issue:
Is a contractual waiver of the constitutional right to a trial by jury enforceable when it is inconspicuously placed in a fine-print, non-negotiated, standardized form contract?
Opinions:
Majority - Coburn, J.S.C.
No. A contractual waiver of the right to a jury trial is not enforceable when it is inconspicuously placed in a non-negotiated contract of adhesion. The right to a trial by jury is a fundamental constitutional right, and courts indulge every reasonable presumption against its waiver. For a waiver to be valid, it must be made knowingly and intentionally. In this case, the contract is a classic example of a contract of adhesion, prepared by the party with superior bargaining power with the intent that it not be read or negotiated. The waiver clause itself is buried deep within the fine print, making it utterly inconspicuous. Drawing an analogy to the Uniform Commercial Code's requirement that warranty disclaimers be conspicuous, the court holds that a waiver of a fundamental constitutional right deserves at least the same level of protection. Therefore, a non-negotiated, inconspicuous jury waiver clause in a form contract signed without the assistance of counsel is unenforceable as a violation of public policy.
Analysis:
This decision extends the principles of unconscionability from substantive contract terms (like warranty disclaimers) to procedural rights, specifically the constitutional right to a jury trial. It establishes a heightened standard for enforcing jury waiver clauses in contracts of adhesion within New Jersey, placing the burden on the drafting party to ensure the waiver is conspicuous and explicitly brought to the other party's attention. This ruling significantly protects consumers and small businesses from unknowingly forfeiting fundamental rights through boilerplate language buried in standardized forms. Future cases involving adhesion contracts will likely require waivers of significant rights to be presented in a much clearer and more prominent manner to be deemed enforceable.
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