Tuesday, March 12, 2013

Hill v. Gateway 2000 case brief

Hill v. Gateway 2000 case brief summary
105 F.3d 1147

SYNOPSIS: Appellant suppliers sought review of an order of the United States District Court for the Northern District of Illinois, which denied their motion to enforce the arbitration clause contained in the items they shipped to appellee customers because it found that the record was insufficient to find that the customers were given adequate notice of the arbitration clause.

-The customers ordered a computer from the suppliers.
-Dissatisfied with its performance, they filed an action against the suppliers, which alleged various claims.
-The suppliers sought enforcement of the arbitration agreement contained in the materials they shipped to the customers.
-The trial court denied their motion.
-They appealed that decision, which was vacated and remanded.
-The trial court was directed to compel arbitration.

-The court held that the enforceability of an arbitration clause is determined on the same basis as any other contract clause.

-A contract need not be read to be effective.
-The terms included in the box stand or fall together – if the terms constitute the contract between the parties then all must be enforced.
-The court held that UCC 2-207(2) only applies where there is a battle of the forms, and that it did not apply in this case because there was only one form.
-Under a provision of the FAA, 9 U.S.C.S. § 2, an arbitration agreement was enforceable save upon such grounds as existed at law or in equity for the revocation of a contract.
-Moreover, that provision of the FAA was inconsistent was any requirement that an arbitration clause be afforded prominence.
-Furthermore, the court stated that a contract did not have to be read in order for it to become effective and that the terms inside a box of software were binding on a consumer who subsequently used it.
-The court found that rationale was also appropriate to the customers and, therefore, concluded that they were bound by the arbitration clause.

OUTCOME: The court vacated the trial court's order, which denied the suppliers' motion to compel arbitration, because the customers were bound by the arbitration clause contained in the materials shipped to and accepted by them, regardless of whether that provision was prominently displayed or the customers were aware of its existence.

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