Itoh v. Jordan International case brief

 Itoh v. Jordan International; CB 723; Notes 53

• Terms: P sent purchase order with no arbitration clause; D sent acknowledgement form expressly conditional on P’s acceptance of arbitration clause in it (this is not an acceptance as per §2-207(1)); P neither assented nor objected, but continued performance.
• Issue: Did they agree to arbitrate any disputes?
• Decision: The exchange of forms between Jordan and Itoh did not result in the formation of a contract under §2-207(1), and Jordan’s form became a counteroffer. But, since Itoh’s purchase order and Jordan’s counter-offer did not in themselves create a contract, §2-207(3) would operate to create one because the subsequent performance by both parties which recognizes the existence of a contract.
  • Since it is clear that Jordan and Itoh forms do not agree on arbitration, the only question, which remains under the code, is whether arbitration may be considered a supplementary term incorporated under some other provision of the Code.
  • Since provision for arbitration is not necessary or missing terms which would be supplied by one of the Code’s “gap filler” provisions unless agreed upon by contracting parties, there is no arbitration term in the §2-207(3) contract which was created by the conduct of Jordan and Itoh in proceeding to perform even though no contract has been established by their exchange of writings.
• Rule: Under §2-207(3), when the forms of party don’t establish a K, conduct does and supplemental terms can be incorporated but are limited to standardized gap fillers, can’t be terms parties don’t agree upon.
• “Knock out” rule = terms on which the writings disagree when nothing ever counted as an acceptance.
• Note: Could also argue here that §1-205 Course of Dealing and Usage of Trade that arbitration is normal in this kind of K and that P had arbitration clause in own K. Also, traditional last shot rule would make it part of the K.