Textile Unlimited, Inc. v. A. BMH and Company, Inc.
Nature of the Case
This was a dispute over the venue to enjoin arbitration.
Facts
Textile Unlimited (P) and A. BMH and Company (D) conducted business involving 38 separate transactions. Each transaction contained an order acknowledgment and invoice from BMH that contained a mandatory arbitration clause with venue to be in Georgia. The clauses required Textile to respond in 24 hours if it did not agree. Textile never responded and eventually it got a shipment that it refused to pay for alleging that the yarn was defective. BMH submitted the matter to arbitration. Textile did not object at first but then protested, contending that the arbitration clause had not been part of their contract.
Textile brought this lawsuit in District Court in California. Textile then moved for a stay of arbitration and the court enjoined both the pending arbitration and any further action regarding arbitration for the dispute. BMH appealed.
Issue
- In a battle of the forms can a party get a lost shot in by simply requiring the other party assent to its terms by mere nonaction?
Holding and Rule of Law
- No. In a battle of the forms a party cannot get a lost shot in by simply requiring the other party assent to its terms by mere nonaction.
This lawsuit is covered by 2-207. BMH argues that the contract was formed under 2-207(1) because the fine print in its forms provided that Textile was deemed to have accepted its terms in full if they did not respond in 24 hours. However, this argument is foreclosed under 2-207 because Textile did not give specific and unequivocal assent to the supplemental conditions. Part of the rationale in this battle of the forms is not to allow a party to have the ability to make a last shot and win with its terms. Rather, if the parties exchange incompatible forms, all of the terms on which the party’s forms do not agree drop out and the UCC supplies the missing terms.
Because no contract was formed under 2-207(1) we must turn to 2-207(3) to determine whether a contract exists and if so what are its terms. The terms are those upon which the parties expressly agreed, coupled with standard gap filling provisions of the UCC. The UCC does not contain a gap filling provision for arbitration. Disputed terms simply drop out and thus it can only be held that the arbitration clause is not part of the contract.
Disposition
Judgment affirmed.