Frank E. Dorton and J. A. Castle, Partners, D/B/A the Carpet Mart v. Collins & Aikman Corporation and Painter Carpet Mills, Inc.
453 F.2d 1161 · U.S. Court of Appeals · 1972
Facts
Frank E. Dorton and J. A. Castle, partners doing business as The Carpet Mart, carpet retailers in Kingsport, Tennessee, purchased carpets from Collins & Aikman Corporation, a manufacturer. Over 55 transactions occurred between 1968 and 1970, typically initiated by oral orders placed by The Carpet Mart. Collins & Aikman then sent acknowledgment forms, some labeled "Acknowledgment," "Customer Acknowledgment," or "Sales Contract," which contained an arbitration clause on the reverse side. The Carpet Mart received these forms before the carpets, took delivery, and paid for them without objection. Later, The Carpet Mart discovered that the carpets were not made from 100% Kodel polyester fiber as represented, but from a cheaper, inferior fiber.
Procedural history
The Carpet Mart initiated this action in a Tennessee state trial court, seeking damages for fraud. The case was subsequently removed to the District Court based on diversity of citizenship. Collins & Aikman then moved for a stay pending arbitration, which the District Court denied, ruling that no binding arbitration agreement existed. Collins & Aikman appealed this denial to the Circuit Court.
Issue
Did the District Court err in holding that The Carpet Mart was not bound by the arbitration agreement appearing on the back of Collins & Aikman's acknowledgment forms, and specifically, under UCC § 2-207, did the arbitration clause become a binding term of the contract?
Holding
The court remanded the case to the District Court for further findings to determine whether the arbitration provision materially altered the oral offers or prior oral agreements, which would prevent it from becoming part of the contract unless expressly agreed to by The Carpet Mart.
Rule
Under UCC § 2-207(1), a definite expression of acceptance or written confirmation operates as an acceptance even with additional or different terms, unless acceptance is expressly made conditional on assent to those terms. This proviso requires the acceptance to clearly reveal the offeree's unwillingness to proceed without the offeror's assent. If a contract is recognized under (1), additional terms are proposals under (2) and become part of the contract between merchants unless they materially alter it. Whether an arbitration clause materially alters a contract is a question of fact for the District Court to determine.
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