## Facts

- Tippins International, Inc. sought to buy gear drive assemblies from Flender Corporation for a steel rolling mill project in the Czech Republic.
- Tippins sent Flender a purchase order stating acceptance was expressly limited to Tippins’ “Standard General Conditions,” and required Tippins’ attached acknowledgment form to be signed and returned as the only recognized acknowledgment.
- Tippins’ standard conditions included an arbitration clause requiring arbitration before the International Chamber of Commerce in Vienna, Austria, governed by Austrian law.
- Flender did not sign or return Tippins’ acknowledgment form and did not otherwise provide a written acceptance on Tippins’ terms.
- Flender manufactured and shipped the assemblies and sent an invoice containing Flender’s “Conditions of Sale and Delivery,” including a clause selecting state or federal courts in Chicago, Illinois as the dispute forum.
- Tippins accepted and used the goods but did not pay the full contract balance.
- Flender sued in Pennsylvania to recover the unpaid price; Tippins moved to compel arbitration under the purchase order clause.

## Issues

1. Whether the parties formed a contract by offer and acceptance incorporating Tippins’ arbitration clause, or instead formed a contract by conduct under 13 Pa. Cons. Stat. § 2207(c) (U.C.C. § 2-207(3)).
2. If the contract was formed by conduct, whether directly conflicting dispute-resolution terms (arbitration in Vienna vs. litigation in Chicago) were excluded from the contract.
3. Whether Tippins could compel arbitration absent a mutually assented-to arbitration agreement.

## Decision

- The Pennsylvania Superior Court affirmed the order denying Tippins’ motion to compel arbitration.
- The court held that Tippins’ arbitration clause was part of its purchase-order offer and never became a term of the parties’ contract.
- The court concluded the parties formed a contract through their course of conduct under § 2207(c).
- Because the contract formed by conduct did not include an arbitration provision, Tippins was not entitled to compel arbitration.

## Legal Principles

- Under 13 Pa. Cons. Stat. § 2207(c) (U.C.C. § 2-207(3)), when the parties’ writings do not establish a contract but their conduct recognizes one, a contract is formed by conduct.
- In a conduct-formed contract under § 2207(c), the contract terms consist of terms on which the parties’ writings agree plus applicable statutory gap-fillers; materially conflicting terms offered in the forms are excluded.
- Arbitration is contractual: a party may be compelled to arbitrate only where there is a valid, enforceable agreement to arbitrate reflecting mutual assent.
- A purchase order term conditioning acceptance on a particular mode (e.g., a signed acknowledgment) may prevent incorporation of the purchase-order terms when the seller performs without accepting in the required manner and responds with materially different terms.

## Conclusion

The court treated the transaction as a U.C.C. § 2-207 battle of the forms in which the parties’ writings did not create a single agreed set of terms, but their performance created a contract by conduct; because the competing arbitration and forum-selection clauses conflicted and there was no mutual agreement to arbitrate, arbitration could not be compelled and the collection action could proceed in court.


Flender Corp. v. Tippins Int'l, Inc., 830 A.2d 1279 (Pa. Super. Ct. 2003)