Monday, February 13, 2006
A seller who wants to ensure that all its contracts incorporate its own terms can do so if it works hard enough at it. That’s the lesson of a recent decision by a federal district court in Pennsylvania.
In the case, British commodity broker Westbrook Resources had a series of four contracts with an American manufacturer, Globe, to supply manganese ore. Three contracts were on forms supplied by Westbrook, whose policy was to contract only on its own terms. On the fourth, Globe argued that an oral contract for sale of 22,000 metric tons of ore had been reached by January 6, 2005. After this date, the parties allegedly exchanged forms. Westbrook refused to sign a Globe form, and instead signed its own form and sent it to Globe. Globe refused to sign the Westbrook form. The parties subsequently performed, and Globe sued, claiming the ore was not of “acceptable size.” Westbrook moved to compel arbitration, based on a clause in its standard form requiring arbitration in the U.K.
Globe argued that there was an oral contract for the ore, and that the subsequent forms were “competing written confirmations of a prior oral agreement.” Under that theory, the arbitration clause would have been knocked out. District Judge Gary Lancaster disagreed. Noting the parties’ prior use of written agreements, he concluded that both parties had a practice of requiring contracts in writing. It seemed to him that Westbrook had, in fact, rejected Globe’s January 19 offer to sign a Globe form, and had sent its own form as an offer. Globe subsequently accepted the offer when it accepted the goods.
Globe Metallurgical v. Westbrook Resources, 2006 U.S. Dist. LEXIS 2307 (Jan. 23, 2006).