Hospitality & Retail -

South Carolina

Are mandatory arbitration provisions recognized in your state? If so, are there any limitations to its enforcement?

Yes, South Carolina generally recognizes mandatory arbitration provisions:

a written agreement to submit any existing controversy to arbitration or a provision in a written contract to submit to arbitration any controversy thereafter arising between the parties is valid, enforceable and irrevocable[.].[i]

We observe “that it is the policy of this state to favor the arbitration of disputes.”[ii] Accordingly, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration.[iii] A motion to compel arbitration made pursuant to an arbitration clause in a written contract should only be denied where the clause is not susceptible to any interpretation which would cover the asserted dispute.[iv] Nevertheless, arbitration is a matter of contract, and our evaluation of the enforceability of an arbitration agreement is guided by general principles of contract law.[v] The parties to an arbitration agreement are at liberty to choose the terms under which they will arbitrate.[vi]

In order to be enforceable, however, any contract containing a mandatory arbitration must contain: “notice … typed in underlined capital letters, or rubber-stamped prominently, on the first page of the contract and unless such notice is displayed thereon the contract shall not be subject to arbitration.[vii] Additionally, because South Carolina Courts evaluate the enforceability of mandatory arbitration provisions based on contract law principles, these clauses are subject to standard contractual defenses such as impossibility, impracticability, unconscionable terms, etc.  Consequently, proponents of mandatory arbitration should be aware that South Carolina Courts routinely invalidate contracts containing mandatory arbitration provisions based on contractual defenses.  Thus, when drafting mandatory arbitration provisions, proponents would do well to keep these defenses in mind.

South Carolina courts will not enforce the following kinds of arbitration agreements

(1) Any agreement or provision to arbitrate in which it is stipulated that this chapter shall not apply or to any arbitration or award thereunder;

(2) Arbitration agreements between employers and employees or between their respective representatives unless the agreement provides that this chapter shall apply; provided, however, that notwithstanding any other provision of law, employers and employees or their respective representatives may not agree that workmen’s compensation claims, unemployment compensation claims and collective bargaining disputes shall be subject to the provisions of this chapter and any such provision so agreed upon shall be null and void. An agreement to apply this chapter shall not be made a condition of employment.

(3) A pre-agreement entered into when the relationship of the contracting parties is such that of lawyer-client or doctor-patient and the term “doctor” shall include all those persons licensed to practice medicine pursuant to Chapters 9, 15, 31, 37, 47, 51, 55, 67 and 69 of Title 40 of the 1976 Code.

(4) Any claim arising out of personal injury, based on contract or tort, or to any insured or beneficiary under any insurance policy or annuity contract.[viii]

The Supreme Court of South Carolina recently held that a court cannot delegate its jurisdiction to decide child custody and support through the use of binding arbitration provisions.[ix]

What is your state’s law, if any, regarding gift cards, subscription services and loyalty programs?

Gift Cards

Under South Carolina law, a gift card or gift certificate (issued after July 1, 2004), which entitles a recipient of the certificate to the delivery of goods or services shall not have an expiration date before the first anniversary of the date on which the certificate is issued or sold, unless the expiration date is provided on the front of the gift certificate in capitalized letters in at least ten-point font.[x]  Expiration dates that do not conform to this requirement shall expire on the first anniversary of the date on which the certificate is issued or sold.[xi] In addition, a condition relating to the use of a gift card or certificate which provides that it decreases in value over a period of time, or that a fee is charged against the balance after a certain period of time must be stated clearly on the certificate, envelope, covering or receipt given to the recipient.[xii]  Otherwise, no deduction shall be applied against the remaining or original balance.[xiii]

If no expiration date is provided on the issuance of a gift card or certificate, a credit memo issued in the ordinary course of an issuer’s business is considered abandoned property if it remains unclaimed for more than five years after becoming payable or distributable.[xiv] However, legislation, titled the Revised Uniform Unclaimed Property Act of 2021, has been introduced (though not yet signed into law), and which provides for the manner, procedures and requirements of expiration of “gift cards” “stored-value cards” and “loyalty cards.” This proposed legislation would make store-value cards and gift cards, if not yet activated by its user, expire one year after the funds would have first been available to the owner.

Subscription Services/Loyalty Programs

At this time, South Carolina does not have any specific law relative to subscription services and/or loyalty programs.

[i] S.C. Code Ann. § 15-48-10.

[ii] Toler’s Cove Homeowners Ass’n, Inc. v. Trident Const. Co., Inc., 355 S.C. 605, 612, 586 S.E.2d 581, 585 (2003).

[iii] Zabinski v. Bright Acres Assocs., 346 S.C. 580, 597, 553 S.E.2d 110, 118 (2001).

[iv] Id. at 597, 553 S.E.2d at 118–119.

[v] Munoz v. Green Tree Fin. Corp., 343 S.C. 531, 538, 542 S.E.2d 360, 364 (2001).

[vi] Dowling v. Home Buyers Warranty Corp., II, 311 S.C. 233, 236, 428 S.E.2d 709, 710 (1993).

[vii] S.C. Code Ann. § 15-48-10.

[viii] Id. at 15-48-10(b).

[ix] Singh v. Singh, 863 S.E.2d 330 (S.C. 2021).

[x] S.C. Code Ann. § 39-1-55(A), (B).

[xi] Id. at 39-1-55(B).

[xii] Id. at 39-1-55(C).

[xiii] Id.

[xiv] S.C. Code Ann. § 27-18-150.