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Where a party seeks to enforce an instrument against the person who signed it, and the signer charges such person with fraud in inducing him to sign said instrument on account of false and fraudulent representations concerning the contents of such instrument, and where the person signing such instrument acts upon such positive representations of fact, notwithstanding the fact that the means of knowledge were directly at hand and open to the person signing such instrument, and where said representations are of the character to induce action upon the person signing said instrument, and, in fact, did induce the signing of such instrument, such inducement constitutes fraud and it is sufficient to vitiate such instrument, and it becomes immaterial whether the person signing such instrument was negligent in failing to use diligence or ordinary prudence to discover the falsity of such representation.
Plaintiff buyers sued the defendant David Stanley Chevrolet, Inc., concerning their purchase of a vehicle at the defendant's car dealership. The defendant moved to compel arbitration. The plaintiffs alleged they were fraudulently induced into entering the arbitration agreement. The trial court found there was fraudulent inducement and overruled the motion to compel arbitration. The court of civil appeals reversed the trial court and remanded for further proceedings concerning the unconscionability of the arbitration agreement. Certiorari was granted.
Under the circumstances, did the trial court err in overruling the defendant car dealership’s motion to compel arbitration?
The court held that the trial court did not err in overruling a vehicle dealership's motion to compel arbitration under Oklahoma's Uniform Arbitration Act, Okla. Stat. tit. 12, § 1851 et seq. (2011), of a buyer's claims because the evidence supported a finding of fraud in the inducement and because a specific challenge to the existence of a valid arbitration agreement was a matter for the court. Although the ruling did not specify whether it was based on actual fraud under Okla. Stat. tit. 15, § 58 (2011) or constructive fraud under Okla. Stat. tit. 15, § 59 (2011), both had the same legal consequences, and a failure to inform the buyer of an inconspicuous arbitration clause supported the ruling under a theory of constructive fraud because the finance manager's statements and the document's structure created a false impression that the buyer was signing only to verify trade-in information.