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Jermax, Inc. v. Baosteel America, Inc.

A-5204-08T1 (N.J. Super. App. Div. 2009) (Unpublished)

CONTRACTS; UCC — Even though a buyer’s offer expressly states that the buyer will not accept additional or different terms from the seller, if the buyer subsequently signs a contract, then the clear and unambiguous provisions of that signed contract are enforceable notwithstanding that the offer said that additional terms would not be part of the final agreement.

Several orders were placed for the purchase of steel products. Among the “conditions of supply” in the purchase order was a provision that the purchase order “shall supersede any provisions, terms and conditions contained in any confirmation or other writing Seller has given or may hereafter give.” Upon receipt of the purchase order, the seller faxed the purchaser a contract containing a provision requiring all contract disputes to be settled by arbitration. The purchaser signed the contract without objecting to the arbitration provision and then sued the seller when a dispute arose. The seller responded by moving for dismissal and for an order compelling arbitration.

The lower court denied the seller’s motion. The seller had argued that “while [purchaser’s] original purchase order limited acceptance by [seller] to the terms [contained in the purchaser’s purchase order], … [seller’s] faxed confirmation to [purchaser] created a contract pursuant to U.C.C. 2-207.” The lower court disagreed and ordered the seller to proceed with the litigation and file an answer. Under U.C.C. Section 2-207(2), “additional terms” must be viewed as proposals for additions to the contract that become part of the contract unless the offer, by its express terms, limits acceptance to the terms of the offer. Since the lower court found that this section of the UCC applied to this dispute, it concluded that the purchaser’s express statement – that any nonconforming terms in the seller’s acceptance would be null and void – excluded the arbitration provision from the agreement. The seller filed a motion for leave to appeal and asked the Appellate Division to stay the lower court’s orders.

The Appellate Division reversed and remanded for the entry of an order directing the parties to arbitrate. It ruled that the seller was entitled to enforce the arbitration clause in light of the unambiguous language of the executed sales contract. An authorized representative of the purchaser had signed the page of the contract that contained the arbitration provision. The Court ruled that because an offeree’s action naturally indicates assent, where an offeree signs a document he or she is generally held to be bound by that document’s terms. According to the Court, this is one of the bedrock principles of contract law. Thus, it held that absent fraud, duress, mutual mistake or unconscionability, none of which were alleged by the purchaser, a signed contract will bind both parties. Moreover, it ruled that “when the terms of a contract are clear and unambiguous, there is no room for construction and the court must enforce those terms as written.” Here, it found that the arbitration provision was clear and thus enforceable.

The Court also noted that the lower court relied on U.C.C. Section 2-207(2) which is applicable in circumstances commonly known as a “battle of the forms.” A “battle of the forms” occurs when the parties to a transaction exchange unsigned documents containing different contract provisions. In the instant case, the Court held that the provision had no applicability where, as here, the parties had entered into a signed contract. Absent exceptions not relevant in this case, the Court held that clear and unambiguous provisions of a signed contract are enforceable and therefore the purchaser’s reliance on Section 2-207(2) was misplaced. Finally, it rejected the purchaser’s argument that, when its representative signed the contract, he intended only to accept the core provisions of the undertaking, namely price, quantity, and time and place of delivery and that he did not consider the purchaser bound by the arbitration provision. The Court rejected this argument because, when interpreting a contract, a party’s subjective intent is irrelevant because it is only the intent “expressed or apparent in the writing that controls.”

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