Polytop Corp. v. Chipsco, Inc.
826 A.2d 945 (2003)
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Rule of Law:
Under UCC § 2-207, a buyer's definite expression of acceptance forms a contract on the seller's terms, including an arbitration clause, if the acceptance is not expressly made conditional on the seller's assent to the buyer's new or different terms.
Facts:
- Chipsco, Inc. manufactures and sells injection molds, and Polytop Corporation is a manufacturer of dispensing closures.
- In January 1999, Chipsco presented a quotation to Polytop for a specific mold.
- Chipsco's quotation contained a provision under 'Terms and Conditions' requiring that all contract disputes be resolved through arbitration.
- Three weeks later, Polytop issued a purchase order for the mold.
- Polytop’s purchase order included the language: 'Any additional or different terms proposed by seller are rejected unless expressly assented to in writing by buyer’s authorized agent.'
- A similar transaction for a second mold occurred in August 1999.
- After the molds were delivered, Polytop believed they were late and of poor quality.
Procedural Posture:
- Polytop Corporation sued Chipsco, Inc. in Superior Court (trial court) for breach of contract.
- Chipsco filed a motion to stay the court proceedings and compel arbitration based on a clause in its quotation.
- The Superior Court justice granted Chipsco's motion, ordering a stay of the proceedings and directing the parties to proceed to arbitration.
- Polytop Corporation appealed the Superior Court's order to the Supreme Court of Rhode Island.
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Issue:
Does a buyer's purchase order that contains a general rejection of 'any additional or different terms proposed by seller' prevent an arbitration clause in the seller's original offer from becoming part of the contract under UCC § 2-207, when the acceptance is not expressly conditional on the seller's assent to the new terms?
Opinions:
Majority - Per Curiam
No. A buyer's purchase order with a general rejection clause does not prevent an arbitration clause in the seller's original offer from becoming part of the contract if the buyer's acceptance was not expressly made conditional on the seller's assent to the buyer's terms. Under UCC § 2-207(1), a contract was formed by the exchange of writings because Polytop's acceptance was not expressly conditional. Polytop's language rejecting 'any additional or different terms' was insufficient to make its acceptance conditional on Chipsco's assent to its terms. The court distinguished this case from others where an acceptance was expressly conditional, which would prevent contract formation by the writings and trigger analysis under § 2-207(3) (contract by conduct). Here, since a contract was formed under § 2-207(1), the arbitration clause from Chipsco's offer became part of the agreement. The court found that the additional terms in Polytop's purchase order did not materially alter the agreement and, between merchants, became part of the contract without displacing the arbitration provision.
Analysis:
This decision reinforces the high threshold required to make an acceptance 'expressly conditional' under UCC § 2-207(1), thereby avoiding the terms of an offer. It clarifies that standard boilerplate language rejecting 'additional or different terms' is generally insufficient to serve as a counteroffer. This holding puts the onus on the party receiving an offer (the offeree) to use clear, explicit language conditioning their acceptance on the offeror's assent to their new terms if they wish to avoid being bound by the original offer's terms. The case serves as a practical guide for commercial drafters on how to navigate the 'battle of the forms,' demonstrating that failure to make an acceptance explicitly conditional can result in the formation of a contract that includes undesirable terms from the original offer.
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