Law School Case Brief
Polytop Corp. v. Chipsco, Inc. - 826 A.2d 945 (R.I. 2003)
It is the law in Rhode Island that a person may waive his or her right to have the courts adjudicate a contract dispute, but there can be no waiver in the absence of an agreement signifying his or her assent. A finding that contracting parties have agreed to substitute arbitration for adjudication must rest on clear contract language as evidence of definite intent to do so. An examination of the documents that comprise the agreement of the parties must demonstrate evidence of mutual assent to arbitration.
Plaintiff buyer had long purchased goods from defendant seller. Its purchase orders always indicated that it would reject additional terms contained in a seller's quote, and the seller's quotes always contained an arbitration clause. The buyer never went ahead and rejected the arbitration term, as its purchase order had threatened it would. Upon dissatisfaction with a certain shipment, plaintiff buyer filed an action for breach of contract against defendant seller due to late delivery and poor quality of the molds that it has purchased. Defendant filed a motion to stay the proceedings, contending that their contract included an agreement to resolve contract disputes through arbitration. The court ordered a stay of the proceedings.
Does the Plaintiff buyer’s acceptance of Defendant’s proposal amounts to the formation of contract that includes assent to the arbitration provision?
The Supreme Court of Rhode Island agreed with the trial court that the buyer was bound by the arbitration clause. Because the parties were both merchants, the applicable Rhode Island Uniform Commercial Code provision, R.I. Gen. Laws § 6A-2-207, made the additional term part of the contract. A mirror image response to the purchase order was not required and, if the buyer had wanted to, it could have rejected the quote on grounds that it contained the arbitration provision, but it did not. Because plaintiff’s acceptance was silent on the issue of dispute resolution and did not materially alter the terms of the original proposal, a contract was formed and the Plaintiff’s acceptance of quotations without expressly requiring the Defendant accept its different or additional terms, amounted to the formation of a contract that included an arbitration provision. The state supreme court denied and dismissed the buyer's appeal, affirmed the judgment, and remanded the case to the trial court.
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