Question

How do caps on damages violate your Seventh Amendment rights? How does mandatory arbitration violate your rights to a trial by jury? How many times have you signed an agreement like this and sacrificed your rights (cell phone, gym membership, credit cards?) Why would people vote to lose their rights by allowing caps on damages

Philosophy

Answer 1

Seventh amendment gives a person rights that guarantee a jury trial for civil cases in the federal courts.

By entering into a contract that has a cap on the maximum damages clause, the person sacrifices his /her seventh amendment rights partially, by agreeing to a pre determined capped value of damages payable irrespective to the quantum of damages actually caused by the breach from the other party. This puts the person at a compromising position while it saves the other party from entering into situations where it might have to pay huge amounts in damages. It actually gives the other party the freeway to work the way it likes, as it knows what a breach would cost at the most. Examples of such contracts are numerous. An example is a movie club membership that entitles you for a cap of $200 in damages in case of any eventualities. If a person sustains injuries due to negligence of club staff, and incurs $3500 in medical bills, all he is going to get is $200.

By entering into contract of mandatory arbitration, again the person partially sacrifices his rights under seventh amendment, where he /she is bound to engage in an arbitration with a mediator to resolve any dispute that may arise. This might give the other party, a liberty to do whatever it wants, including wilful negligence or breach with intention, because it knows that the matter would never go to a jury, and an arbitration would not cost much, if at all it happens.

The people often end up losing their rights because they never think it would ever materialise and reach up to that level. They see the perceived value they get from entering into a contract more than this risk ( for example, city's best gym having such clause will hardly deter anyone due to capped damages clause). It is often ignored or read over, when signing the contract, because a person thinks " I would not be the one who would ever have to go up to that level".