## Facts

- Itoh, a steel buyer, sent Jordan a purchase order for steel coils.
- Jordan replied with an acknowledgment stating its acceptance was expressly conditional on Itoh’s assent to additional/different terms printed on the reverse side.
- The reverse side included a broad arbitration clause requiring arbitration in New York City under American Arbitration Association rules.
- Itoh did not expressly assent to, or promptly object to, the arbitration term.
- The parties performed: Jordan delivered the coils and Itoh paid.
- Itoh resold the coils to Riverview under a separate contract containing an arbitration clause that excluded disputes “as to quality.”
- Riverview asserted the steel was defective and delivery was late, and refused to pay Itoh.
- Itoh sued Jordan and Riverview in federal district court; Jordan moved to stay the litigation pending arbitration under FAA § 3 based on its acknowledgment’s arbitration clause.
- The district court denied a stay; Jordan appealed.

## Issues

1. Whether the dispute was “referable to arbitration” under FAA § 3 based on an arbitration clause appearing only in Jordan’s expressly conditional acknowledgment, where Itoh never expressly assented but both parties performed.
2. Whether, under U.C.C. § 2-207, a contract formed by the parties’ conduct included Jordan’s arbitration clause or instead consisted only of mutually agreed terms plus U.C.C. supplementary terms.

## Decision

- The Seventh Circuit affirmed the denial of Jordan’s motion to stay pending arbitration.
- Jordan’s acknowledgment, being expressly conditional on Itoh’s assent to additional terms, did not create a contract under U.C.C. § 2-207(1) absent express assent.
- A contract arose by conduct under U.C.C. § 2-207(3), consisting only of terms on which the forms agreed plus U.C.C. supplementary terms.
- The arbitration clause was not a mutually agreed term and was not supplied by the U.C.C. as a supplementary (gap-filler) term.
- Because no written agreement to arbitrate existed between Itoh and Jordan, FAA § 3 did not require a stay.

## Legal Principles

- FAA § 3 mandates a stay only when the court is satisfied the suit involves an issue referable to arbitration under a written arbitration agreement.
- Under U.C.C. § 2-207(1), a purported acceptance that is “expressly conditional” on assent to additional/different terms is not an acceptance unless the other party expressly assents.
- When no contract is formed by the exchange of forms but the parties perform, U.C.C. § 2-207(3) recognizes a contract by conduct limited to agreed terms plus U.C.C. supplementary terms.
- Arbitration provisions are not U.C.C. gap-fillers; they do not enter a § 2-207(3) contract unless both parties agree to them.

## Conclusion

The court held that performance created a contract under U.C.C. § 2-207(3) without Jordan’s arbitration clause, so there was no written arbitration agreement and the litigation could not be stayed under FAA § 3.


C. Itoh & Co. (Am.) Inc. v. Jordan Int’l Co., 552 F.2d 1228 (7th Cir. 1977)