Law School Case Brief
Stemcor USA, Inc. v. Trident Steel Corp. - 471 F. Supp. 2d 362 (S.D.N.Y. 2006)
Under N.Y. U.C.C. Law § 2-207(1), a seller's form response to a buyer's purchase order normally constitutes a definite and seasonable expression of acceptance if it repeats the terms of the buyer's order. According to the proviso at the end of § 2-207(1), if the seller's response does not state that acceptance is "expressly made conditional" on the buyer's assent to additional terms the seller included, that response operates as an acceptance and a contract is formed.
The parties entered into a series of agreements under which the buyer purchased steel casings from the seller. The buyer resold the casings and was sued by three oil well operators for allegedly providing defective casings; the buyer filed third-party claims against the seller for indemnification. The seller argued that arbitration was required based on an arbitration clause that was contained in the acknowledgement forms the seller used to confirm the buyer's orders; the seller claimed that the buyer's purchase orders, which did not contain an arbitration clause, were offers and that the acknowledgement forms were counteroffers that the buyer accepted by performance.
Could the seller compel arbitration based on the arbitration clause that was contained in the acknowledgment forms?
The Court held that the acknowledgement forms were acceptances under N.Y. U.C.C. Law § 2-207(1), as acceptance was not expressly made conditional upon the buyer's assent to the additional terms in the forms, including the arbitration clause. According to the Court, the arbitration clause did not become part of the contracts under § 2-207(2)(a) because the purchase orders clearly limited acceptance to the terms contained in the orders. Therefore, there was no valid agreement to arbitrate under 9 U.S.C.S. § 2 of the FAA.
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