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United States Court of Appeals for the Ninth Circuit - 240 F.3d 781
Tags: Additional Terms
tl;dr:
Yarn sale gets twisted in knots by the addition of an arbitration clause not agreed to, but, under UCC § 2-207(3), conduct still forms a contract.Video Summary
Case Summary
In Textile Unlimited, Inc. v. A..BMH and Company, Inc. (2001), a company (Textile) sued another (A..BMH) for breach of contract. Textile claimed that A..BMH agreed to arbitrate disputes from their transactions. Textile purchased yarn goods from A..BMH in thirty-eight transactions. Each time, Textile sent a purchase order, and A..BMH responded with an invoice and order acknowledgement, which included additional terms requiring arbitration in Atlanta, Georgia, under the American Arbitration Association's rules.
A..BMH's terms stated that if Textile did not respond within 24 hours, they would be considered accepted. Textile never responded within that time frame. When Textile refused to pay for defective yarn, A..BMH submitted the dispute to arbitration, which Textile objected to, arguing that the arbitration clause was not part of their contract.
Textile filed an action in a California district court to prevent arbitration, and the court ruled in Textile's favor. A..BMH appealed. This case is significant because it demonstrates how arbitration clauses can be enforced or rejected under contract law. Arbitration clauses are valid if they are part of a valid contract and do not violate public policy or statutory law.
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The case involves a contract dispute between Textile Unlimited, Inc. and A..BMH and Company, Inc. regarding the inclusion of an arbitration clause in the contract. The court found that the buyer must accept the seller's terms and conditions, including the arbitration clause, for the sale to proceed. The court also determined that the Federal Arbitration Act does not require venue in the designated arbitration locale. Section 4 of the Federal Arbitration Act allows parties to petition any US district court with jurisdiction under Title 28 to compel arbitration, but injunction actions should be considered under general venue provisions. The lower court may have erred in its interpretation of Section 4. The court held that Textile did not waive its objection to arbitration as it never entered into an arbitration agreement. The court distinguished this case from a previous case where the plaintiff participated in the arbitration proceedings and failed to move to vacate the award within the specified time, thereby waiving their objection to arbitration.
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