– 3 years, 55 transactions….Carpet Mart is bringing suit for fraud and misrepresentation on the quality of their rugs.
– Upon “Collins” receiving a telephone order – typed information regarding the deal.
– Becomes a contact when:
1. Signed and delivered by buyer to seller and accepted by seller
2. When buyer has received and retained this order for ten days w/o rejection
3. When buyer has accepted deliver on any part of merchandise
• or when buyer has indicated acceptance of terms thereof
*** Acceptance or “order” subject to all of the terms and conditions on the face and reverse side hereof***
– After moving to district court, “Collins” stated that Carpet Mart was bound to arbitration agreement between the parties…District Court denied this motion.
– What happened
o Made a deal over the phone after which Collins drafted up an acknowledgment form with the above info and sent to “Carpet.”
• Absent of delay, Carpet always received acknowledgment prior to shipping out rugs.
o Evidence showed that oral agreements were reached between the parties prior to Collins sending their acknowledgment.
• Collins’ acceptance was not expressly conditional on the buyer’s assent to the additional terms satisfying 2-207(1)
• “Directly and distinctly stated or expressed rather than implied”
o Since they are both merchants in the industry the arbitration provision will be deemed to have been accepted unless it materially altered the terms of the carpet marts oral offers (usually price and goods).
o Defendant wanted the case in a New York arbitration.
• Defense was that the offer was accepted based upon performance and that it doesn’t alter the deal.
o Plaintiff would argue that the “proposal” materially altered the deal.
– District court
o No binding arbitration agreement was created…had not once been binding during the 50 odd transactions. Did not allow arbitration hearing in New York.
o Defendants forms were either:
• Acceptances or confirmations.
– Did the additional terms that were proposed by Collins acknowledgment letter materially alter the terms of the Carpet Mart’s oral offers?
– Maybe, lower court must decide based upon the reasoning section
– If acceptances were not expressly conditional on the buyer’s assent to the additional terms, it is deemed a contract if and only if the additional terms (proposals) did not materially alter the terms of the oral offers. 2-207(1)(b).
– District court must show further findings whether the arbitration provision materially altered the oral offer under 2-207(2)(b).
– If the arbitration clause did in fact alter Carpet Mart’s offer it could not become part of the contract unless expressly agreed upon by Carpet.
– ¬Remanded for more “fact finding” in the lower court.
– District court finds that Collins acknowledgment letters were acceptance and the arbitration provision was additional to the terms of the carpet marts oral orders it will be recognized a contract.
o It will be deemed a proposal and accepted by mart unless it materially altered the oral offers.
– Showing the difference between common law “mirror image rule” and 2-207 – Did not show rejection or counter-offer.
o Common law- A buyer was deemed to have accepted the seller’s counter-offer if the took receipt of the goods and paid for them w/o objection.
– “Battle of the forms” – Attorneys draft up contracts to severely favor their client.
– 207(1) – No contract is recognized either because no definite expression exists or because the offeree’s acceptance is expressly conditioned on the offeror’s assent to the additional terms.
– Typical cases where it effects materiality is when:
o The merchant is surprised or hardships endured…
– The clauses usually refer to the actual shipments and price of the good and not where the forum of a hearing would take place.
o I would bet that this “proposal” did materially alter the assent of the deal.
o Surprise or hardship, unreasonable surprise.