## Facts

- C.H.I. Inc. (a California fabric purchaser) sent several purchase orders to Marcus Brothers Textile, Inc. (a New York fabric supplier).
- C.H.I.’s purchase orders contained terms selecting California courts and California law for disputes.
- Marcus Brothers responded with written confirmation forms stating on the face that the transaction was subject to terms on the front and reverse side “including the provision for arbitration,” that those terms were accepted by the buyer, that they superseded the buyer’s order form, and that they constituted the entire contract.
- The reverse side contained an arbitration clause designating New York as the place of arbitration.
- C.H.I.’s president signed each confirmation form.
- After a dispute, C.H.I. sued in California state court for breach of contract and declaratory relief; Marcus Brothers removed based on diversity.
- The district court dismissed the action for failure to arbitrate, enforcing the arbitration clause.

## Issues

1. Whether the arbitration clause in the seller’s signed confirmation was unenforceable as a contract of adhesion.
2. Whether the buyer lacked knowing consent to arbitration where arbitration was not discussed orally but was referenced on the confirmation form.
3. Whether the buyer’s signature was obtained by economic duress because the seller would not ship until confirmations were signed.
4. Whether the arbitration clause was unenforceable for lack of specificity, ambiguity, or lack of mutuality, and whether it displaced conflicting dispute-resolution terms in the buyer’s purchase orders.

## Decision

- The Ninth Circuit affirmed the dismissal for failure to arbitrate.
- The court held the arbitration clause enforceable under the Federal Arbitration Act.
- The court rejected defenses based on adhesion, lack of consent, economic duress, and alleged ambiguity or lack of mutuality.
- The court treated the signed confirmation form as the operative agreement, including its arbitration requirement, notwithstanding conflicting terms in the buyer’s purchase orders.

## Legal Principles

- The Federal Arbitration Act requires enforcement of written arbitration agreements in contracts involving commerce, subject to generally applicable contract defenses.
- A party that signs a commercial contract with a conspicuous reference to arbitration is ordinarily bound, even if arbitration was not discussed during oral negotiations.
- Standard-form terms and unequal bargaining power, without a showing of oppression or unconscionability, do not invalidate an arbitration clause.
- Economic duress requires wrongful or unlawful pressure; insisting on standard contractual terms as a condition of performance is not duress absent illegitimate conduct.
- An arbitration clause is enforceable when sufficiently definite as to arbitration and forum, and it is not invalid for lack of mutuality where either party may invoke arbitration.
- Where a signed confirmation states it supersedes prior order forms and is the entire contract, it can displace conflicting forum-selection and choice-of-law language in earlier purchase orders.

## Conclusion

The Ninth Circuit enforced a signed, conspicuously referenced arbitration clause requiring arbitration in New York and affirmed dismissal of the buyer’s lawsuit, holding that the FAA favored enforcement and that the buyer’s adhesion, consent, duress, and ambiguity arguments did not bar arbitration, even though the buyer’s purchase orders had selected California courts and law.


C.H.I. Inc. v. Marcus Bros. Textile, Inc., 930 F.2d 762 (9th Cir. 1991)