Commerce & Indus. Ins. Co. v. Bayer Corp.

433 Mass. 388, 742 N.E.2d 567 (2001)

 

RULE:

Under Mass. Gen. Laws ch. 106, § 2-207, there are essentially three ways by which a contract may be formed. First, if the parties exchange forms with divergent terms, yet the seller's invoice does not state that its acceptance is made expressly conditional on the buyer's assent to any additional or different terms in the invoice, a contract is formed under § 2-207(1). Second, if the seller does make its acceptance expressly conditional on the buyer's assent to any additional or divergent terms in the seller's invoice, the invoice is merely a counteroffer, and a contract is formed under § 2-207(1) only when the buyer expresses its affirmative acceptance of the seller's counteroffer. Third, where for any reason the exchange of forms does not result in contract formation, such as under § 2-207(2)(a), or the buyer does not accept the seller's counteroffer, a contract nonetheless is formed under § 2-207(3) if their subsequent conduct demonstrates that the parties believed that a binding agreement had been formed.

FACTS:

Plaintiff purchased goods from defendant. With each purchase, plaintiff sent defendant pre-printed purchase orders that contained an arbitration clause. With each order it filled, defendant sent plaintiff a pre-printed invoice that stated that defendant did not accept any additional or conflicting terms contained in the purchase orders. When a dispute arose and plaintiff brought suit, defendant sought to compel arbitration under plaintiff's purchase order arbitration clause, and appealed when the superior court found the clause unenforceable.

ISSUE:

Is the arbitration clause on the pre-printed purchase orders by the plaintiff enforceable even if it is in conflict with the terms contained in the pre-printed invoices sent by the defendant?

ANSWER:

No.

CONCLUSION:

The supreme court affirmed. Because of the express clause in its invoice, the arbitration clause never became part of the agreement. The parties had no prior course of dealing using arbitration, and the agreement between the parties only came into effect under Mass. Gen. Laws ch. 106, § 2-207(3) where subsequent conduct demonstrated that the parties believed that a binding agreement had been formed. That limited the provisions of the agreement to those actually agreed to.

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