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Predispute Contractual Waivers of Jury Trial

By Mark Mengelberg
January 31, 2007

Predispute waivers of jury trials are unenforceable under California law, subject to certain limited exceptions. While the recent California Supreme Court case of Grafton Partners v. Supreme Court, 36 Cal. 4th 944 (2005), invalidated such waivers, there remain two ways that parties can agree, predispute, to avoid a jury trial in commercial real property related transactions.

The Grafton Case

On Aug. 4, 2005, the California Supreme Court held in Grafton that predispute agreements to waive jury trials are unenforceable. The holding in Grafton is retroactive, applying to contracts entered into before and after the date of decision. Because the Supreme Court's decision in Grafton was not based on the unconscionability of jury trial waivers, these waivers are unenforceable even in commercial settings where both parties are represented by sophisticated counsel. The Grafton holding sent shockwaves through the California real estate legal community, as most real estate-related contracts (e.g., leases, loan documents, purchase and sale agreements) contain waivers of jury trial.

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