## Facts

- Two carpet retailers (The Carpet Mart) repeatedly purchased carpets from a manufacturer/seller (Collins & Aikman) in more than 55 transactions from 1968 to 1970.
- The Carpet Mart placed orders orally by telephone.
- After each oral order, Collins & Aikman mailed a preprinted sales acknowledgment form, usually received before shipment.
- The front of the acknowledgment stated the sale was “subject to” terms and conditions on the reverse side.
- The reverse side, in fine print, contained an arbitration clause requiring arbitration of disputes.
- The Carpet Mart accepted shipments and paid for the goods without objecting to the acknowledgment terms.
- After a customer complaint in 1970, The Carpet Mart alleged the carpets were misrepresented as 100% Kodel polyester but included inferior fiber, and sued for fraud and misrepresentation damages.
- Collins & Aikman sought a stay pending arbitration under the Federal Arbitration Act, asserting the arbitration clause was part of the contract.

## Issues

1. Whether the seller’s acknowledgment form was a “definite and seasonable expression of acceptance” or written confirmation under U.C.C. § 2-207(1), rather than a nonforming writing requiring resort to § 2-207(3).
2. Whether the acknowledgment’s “subject to” language made acceptance “expressly conditional” on the buyer’s assent to the additional terms, preventing contract formation under § 2-207(1) absent assent.
3. If a contract was formed, whether the arbitration clause was an additional term that became part of the contract between merchants under § 2-207(2), or was excluded as a material alteration under § 2-207(2)(b).

## Decision

- The court held the district court erred in analyzing contract formation under U.C.C. § 2-207(3).
- The seller’s acknowledgment was a “definite and seasonable expression of acceptance” under § 2-207(1) despite containing additional terms.
- “Subject to” language did not make acceptance “expressly made conditional” on the buyer’s assent to the additional terms; therefore, a contract was formed under § 2-207(1).
- The arbitration clause was an additional term governed by § 2-207(2); its inclusion turned on whether it materially altered the contract.
- The case was reversed and remanded for the district court to determine, based on facts such as course of dealing, whether the arbitration clause would cause surprise or hardship and thus materially alter the bargain.

## Legal Principles

- Under U.C.C. § 2-207(1), an acknowledgment can form a contract as an acceptance even if it contains additional or different terms, unless acceptance is expressly conditional on the offeror’s assent to those terms.
- Language stating a transaction is “subject to” additional printed terms generally does not, by itself, satisfy the “expressly made conditional” requirement; the offeree must clearly indicate no contract will exist without specific assent.
- Between merchants, additional terms in an acceptance are treated as proposals that become part of the contract under U.C.C. § 2-207(2) unless an exception applies, including material alteration.
- Whether an arbitration clause in a standard form materially alters the contract depends on whether it would impose surprise or hardship in light of the parties’ dealings and commercial context.
- When a writing qualifies as an acceptance under § 2-207(1), courts should determine contract terms under § 2-207(2) rather than defaulting to § 2-207(3).

## Conclusion

The Sixth Circuit held that the seller’s acknowledgment formed a contract under U.C.C. § 2-207(1) and that “subject to” language did not make acceptance expressly conditional on assent; it remanded for a factual determination whether the arbitration clause materially altered the parties’ agreement under § 2-207(2)(b).


Dorton v. Collins & Aikman Corp., 453 F.2d 1161 (6th Cir. 1972)