≡ Menu

Drafting tip: At least include a link to any additional terms referenced but not provided

A buyer’s purchase-order form referred to an external document with additional terms and conditions, and said the document would be provided on request. In a subsequent lawsuit the seller later denied having ever received the additional document. That led to what had to have been an expensive court fight (still not resolved) over whether an arbitration provision and an indemnification provision were part of the contract. This case presents a nice illustration of the Battle of the Forms under UCC § 2-207. The procedural posture is a bit tangled, but here’s the gist of it:

1. The buyer was a manufacturer of heavy machinery; the seller was an authorized Caterpillar dealer. The buyer sent the seller a purchase order for Caterpillar engines. See Nebraska Machinery Co. v. Cargotec Solutions, LLC, No. 13-2753 (8th Cir. Aug. 7, 2014).

2. The buyer’s purchase order referenced, but didn’t include, another document, “Form F-027.” That form contained an arbitration provision and an indemnification provision. The purchase order said that if the seller didn’t already have Form F-027 on file, the buyer would provide it. See id., slip op. at 2.

3. The seller responded with an invoice and its own purchase order [sic], containing the seller’s own preferred terms and conditions, which didn’t include an arbitration provision (nor a comparable indemnification provision).

4. Apparently the Caterpillar engines were delivered, but allegedly didn’t perform satisfactorily.

5. The buyer demanded arbitration; the seller responded by filing a lawsuit seeking a declaratory judgment that arbitration was not required.

6. Here’s where it got interesting: In the lawsuit, the seller denied ever having received the buyer’s Form F-027, containing the arbitration and indemnification provisions. Likewise, the buyer claimed that while it had received the seller’s invoice, it never received the seller’s purchase order [sic] containing the seller’s preferred terms and conditions.

7. Thus arose a Battle of the Forms issue as to whether the parties’ agreement included the arbitration provision.

8. The Eighth Circuit ruled that, before ruling on that issue, the district court should have conducted a bench trial (there having been no jury demand) to make findings of fact about just who had received what contract documents, and therefore just what terms were or were not part of the parties’ contract under the UCC.

Lesson: It’s understandable that the buyer didn’t want the hassle and expense of having to provide a hard copy of its Form F-027 with every purchase order. Merely offering to provide a copy of the form, though, might well have been insufficient to bind the seller to its terms. The buyer could have put itself in a stronger position in court if it had posted the Form F-027 on its Web site and then included a link to the form in its printed purchase order.

I’m going to mention this case in the commentary to the Common Draft arbitration provisions, and also its Additional Terms clause (both of which will soon be part of a draft IACCM Contract Protocol).

{ 0 comments… add one }

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.