Dorton v. Collins & Aikman Corp.
453 F.2d 1161 (1972)
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Rule of Law:
Under UCC § 2-207, an additional term in a written confirmation or acceptance, such as an arbitration clause, is treated as a proposal. Between merchants, this proposal becomes part of the contract unless it materially alters the original offer or agreement.
Facts:
- The Carpet Mart, a carpet retailer, engaged in over 55 transactions with Collins & Aikman, a carpet manufacturer, during 1968, 1969, and 1970.
- For each transaction, The Carpet Mart placed an order for carpets orally, primarily via telephone calls to Collins & Aikman's order department.
- Following each oral order, Collins & Aikman mailed a printed sales acknowledgment form to The Carpet Mart.
- The face of these acknowledgment forms stated that the order was subject to all terms and conditions on the face and reverse side, including arbitration.
- The reverse side of the forms contained a clause requiring all claims arising from the contract to be submitted to arbitration in New York City.
- The Carpet Mart always received the acknowledgment forms before the carpets were delivered.
- In all transactions, The Carpet Mart accepted delivery of and paid for the carpets without objecting to any of the terms contained in the acknowledgment forms.
- The Carpet Mart later discovered that some of the carpets were composed of a cheaper, inferior fiber rather than the 100% Kodel polyester fiber it had ordered.
Procedural Posture:
- The Carpet Mart filed a lawsuit against Collins & Aikman in a Tennessee state trial court, seeking damages for fraud and misrepresentation.
- Collins & Aikman had the case removed to the United States District Court for the Eastern District of Tennessee based on diversity of citizenship.
- In the District Court, Collins & Aikman filed a motion to stay the proceedings pending arbitration, arguing that a valid arbitration agreement existed.
- The District Court denied the motion for a stay, holding that no binding arbitration agreement was formed between the parties.
- Collins & Aikman, as the appellant, appealed the District Court's denial to the United States Court of Appeals for the Sixth Circuit.
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Issue:
Under UCC § 2-207, does an arbitration clause included in a seller's written sales acknowledgment form become a binding part of a contract between merchants when the buyer accepts the goods without objection, but the original oral offer was silent on arbitration?
Opinions:
Majority - Celebrezze, J.
Remanded. An arbitration clause included in a seller's acknowledgment form does not automatically become part of the contract and is subject to the analysis under UCC § 2-207. First, the seller's acceptance was not 'expressly made conditional on assent to the additional terms' as required by § 2-207(1) to form a counteroffer; language stating the acceptance is merely 'subject to' the additional terms is insufficient. Therefore, a contract was formed under § 2-207(1). The arbitration clause is thus an additional term treated as a 'proposal for addition to the contract' under § 2-207(2). Between merchants, this proposal becomes part of the contract unless it 'materially alters' the original oral offer. The case is remanded for the district court to make a factual determination as to whether the arbitration clause constituted a material alteration of the parties' oral agreement.
Analysis:
This case significantly clarifies the 'battle of the forms' under UCC § 2-207. It establishes a high bar for an acceptance with additional terms to be considered a counteroffer, narrowly interpreting the 'expressly conditional on assent' proviso of § 2-207(1). This interpretation pushes most disputes into the § 2-207(2) analysis, where the key question becomes whether the additional term 'materially alters' the contract. The decision prevents sellers from unilaterally imposing significant, non-negotiated terms like arbitration through boilerplate language, shifting the focus to whether such a term would result in surprise or hardship to the other party.
