Klocek v. Gateway, Inc.

104 F.Supp.2d 1332 · U.S. District Court · 2000

Facts

William S. Klocek purchased a computer from Gateway, Inc. and a scanner from Hewlett-Packard, Inc. When the Gateway computer was delivered, a copy of Gateway's Standard Terms and Conditions Agreement was included in the box. These terms stated that by keeping the computer beyond five days after delivery, the customer accepted the terms, which included an arbitration clause. Klocek later alleged that Gateway made false promises regarding technical support and breached warranties, and that Hewlett-Packard failed to warn about product incompatibility.

Issue

The primary legal question is whether the arbitration clause included in Gateway's Standard Terms and Conditions, shipped inside the computer box, became part of the contract between Klocek and Gateway. A secondary issue is whether the court had diversity jurisdiction over Klocek's claims against Hewlett-Packard.

Holding

The court held that the arbitration clause in Gateway's Standard Terms did not become part of the contract because Klocek, as a non-merchant, did not expressly agree to the additional terms. The court also dismissed the claims against Hewlett-Packard for lack of subject matter jurisdiction due to an insufficient amount in controversy.

Rule

Under UCC § 2-207, when a consumer (non-merchant) purchases goods and receives additional terms in the packaging, these terms are considered proposals for addition to the contract. For these additional terms to become part of the contract, the buyer must expressly agree to them; merely keeping the goods does not constitute express assent. The court reasoned that the buyer is typically the offeror in consumer transactions, and the vendor's shipment with additional terms is not a conditional acceptance unless clearly expressed. For diversity jurisdiction, the plaintiff must establish damages exceeding $75,000, and class claims cannot be aggregated.

Read the full opinion on CourtListener

Case brief last reviewed . Prepared by CaseReader from the published opinion.