C. Itoh v Jordan
U.S. Ct. App. 1977
Author:- Sam Biers

Relevant Facts:    PL Itoh submitted a purchase order/offer to Jordan for steel coils. Jordan sent its form, 4 days later, back to Itoh.  That form contained an express condition to all terms within, unless Itoh notified them at once.  On the reverse side was an arbitration clause.  Itoh also entered into an agreement with Riverview for the same steel coils.   On the reverse side an arbitration clause was listed for all disputed issues, except as to quality.  After the steel was delivered by Jordan and paid for by Itoh, Riverview stated the steel coils were defective and refused to pay.

Legal Issue(s): Whether a contract had been formed by the exchange of forms between Itoh and Jordan, if so, whether the arbitration term is included in that contract?

Court’s Holding:

Procedure: D. Ct. denied stay of action pending arbitration and moved all issues within one judical forum.  Jordan appeals.  Affirmed.

Law or Rule(s): C. Law - An acceptance which contained additional terms to those of the offer constituted a rejection of the offer and became a counter offer.  2-207 (1)

Court Rationale: Operates to prevent an exchange of forms from creating a contract where “acceptance is expressly made conditional on assent to the additional terms.”  Jordan’s form contained the language “Seller’s acceptance is . .expressly conditional on Buyer’s assent. . .are not acceptable, Buyer should notify Seller at one.”  Itoh never expressly assented to the challenged arbitration term.  The exchange of forms between Df and PL did not result in the formation of a contract under 2-207(1), and Jordan’s form became a counter offer. 

However both parties proceeded to performance. “Conduct by both parties which recognizes the existence of a contract is sufficient to establish a K for sale although the writings of the parties do not otherwise establish a K.” [2-207-(3)] “the terms of the particular K consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated.”  The terms of each party’s forms do not agree.  The terms is a disputed term and not included w/i both forms, therefore it is not a supplementary term.  An agreement for arbitration must be in writing.  There is not written arbitration agreement between both parties.

Plaintiff’s Argument: The forms exchanged constitute offer and counter offer.

Defendant’s Argument: There exists an agreement in writing to arbitrate between Itoh and Df.