Battle of the Forms in a Widget Supply Contract
On March 3, Harbor Supply, an Idaho merchant, emailed a purchase order to Cascade Widgets, an Oregon merchant, for 1,000 steel widgets at $12.00 each, delivery by June 1. The purchase order stated: 'This offer is expressly limited to the terms on this form; any additional or different terms are rejected.' Cascade replied on March 5 with an acknowledgment stating '$13.00 per unit, shipment by July 15,' and adding an arbitration clause requiring disputes to be arbitrated in Portland. Cascade shipped 1,000 widgets on June 20. Harbor accepted them on June 22 and paid $12,000. A dispute arose over the $1,000 price difference and a cracked widget that injured Harbor's employee. Harbor sues in Idaho state court; Cascade moves to compel arbitration. Harbor argues no contract formed because the price terms differed. Both parties are merchants under the UCC.
1. Was a contract formed, and at what price?
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Conclusion: a contract formed through conduct, but the price is not $13. Under UCC § 2-207(3), when the writings do not establish a contract but the parties' conduct recognizes one, a contract exists consisting of the terms on which the writings agree, supplemented by UCC gap-fillers. Cascade's March 5 acknowledgment was not a clean acceptance: it changed the price and delivery date. Harbor's purchase order expressly limited acceptance to its terms, so Cascade's different price did not become part of the contract under § 2-207(2). But Harbor's $12 term also never became binding, because Cascade never agreed to it. The conflicting price terms drop out under the knockout approach. The gap-filler under § 2-305 supplies a reasonable price at the time of delivery. Harbor's $12,000 payment does not prove a $12 contract; it may be a partial payment or evidence of value. The court should determine a reasonable price, not automatically enforce either writing.
2. Is the arbitration clause enforceable against Harbor?
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Conclusion: no, the clause is not part of the contract. The arbitration clause was an additional term in Cascade's acknowledgment. Between merchants, additional terms can become part of the contract under § 2-207(2) unless they materially alter the deal, the offer expressly limits acceptance to its terms, or the offeror objects. Harbor's purchase order expressly limited acceptance, so that exception applies. Independently, a compulsory arbitration clause requiring Portland as the forum is a material alteration: it deprives Harbor of a court remedy and imposes travel and cost. The clause therefore does not become part of the contract. Cascade's motion to compel should be denied because the Federal Arbitration Act enforces arbitration agreements, not clauses that were never assented to. The UCC's formation rules govern whether an agreement to arbitrate exists at all. Harbor never agreed to Portland arbitration, so there is no enforceable arbitration agreement.
3. Does the injured employee's claim fall within the arbitration clause?
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Conclusion: no, because there is no enforceable arbitration clause. The employee's personal-injury claim is derivative of the widget purchase, but the threshold problem is that Cascade never formed a contract containing the Portland arbitration clause. Without an agreement to arbitrate, the employee cannot be compelled to arbitrate. Even if the clause had become part of the contract, Harbor's employee is not a signatory. Cascade would need to show that the employee is bound as an agent, third-party beneficiary, or by equitable estoppel. A broad clause might reach related tort claims, but the clause here is a boilerplate addition buried in an acknowledgment, not a term Harbor accepted. The employee's claim should proceed in court unless Cascade can prove a separate arbitration agreement with the employee. The motion to compel should be denied as to the employee as well.