A Louisiana Battle of the Forms Case!

It’s a fact pattern just like we draw them up in law school!  Plaintiff Axiall Canada, Inc. (Axiall) purchased de-misters for its chlor-alkalai facility in Quebec from Defendant MECS, Inc., presumably based in Louisiana.  There was a series of de-mister transactions.  Generally, MECS issued a proposal to Axiall. Axiall then sent a Purchase Order, and MECS sent an Order Acknowledgement before shipping the de-misters.  MECS’s documents included arbitration clauses, and the court states that the forms expressly limited MECS’s “acceptance of any purchase orders to MECS’s standard terms and conditions of sales.” Axiall’s form was silent about arbitration, but it contained the following language:

Purchaser . . . hereby objects to and rejects any additional or modified terms proposed by Seller on which this sale would be rejected and any such proposed terms shall be deemed void.

Axiall accepted the de-misters but was than dissatisfied with them and sued for breach of contract, breach of warranty and redhibition, which is apparently a Louisiana term for rescission.  MECS first moved the case to federal court and then sought to have the case dismissed and to compel arbitration.  In Axiall Canada, Inc. v. MECS, Inc., the Fifth Circuit affirmed the District Court’s denial of the motion to compel arbitration.

There is no question that the parties had a contract.  They performed.  The question is when that contract was formed and which party’s terms govern.  Axiall argued that MECS’s proposals were offers and that its purchase order was the acceptance.  MECS argued that the contract was only formed upon Axiall’s acceptance of the goods. 

This is a tough Battle of the Forms problem that is not made any easier by Louisiana’s idiosyncratic version of the UCC or by the court’s cursory reasoning.  One issue unaddressed in the case is the role of the UN Convention on the International Sale of Goods (CISG).  This is an international sale of goods between two business entities, so one would expect the CISG to govern.  Perhaps the parties thought that they had contracted around the CISG by specifying that Louisiana law would govern.  That ought not to have been enough, given that federal law (including treaty law) is a part of Louisiana law.  Perhaps the parties did not raise the issue, perhaps because the parties did in fact expressly contract around the CISG.

A Battle of Forms, Image by DALL-E

The court rejects Axiall’s argument that its purchase orders were acceptances.  Its reasons for doing so are pretty conclusory.  Louisiana’s version of the UCC’s § 2-207(1) is Article 2601, which states that “[a]n expression of acceptance of an offer to sell a movable thing suffices to form a contract of sale if there is agreement on the thing and the price . . . unless acceptance is made conditional on the offeror’s acceptance of the additional or different terms.”  The court seems to think that the language quoted above is consistent with the language of Article 2601, but that is not clearly the case.  Axiall has stated its terms; it has not made its acceptance expressly conditional on MECS’s acceptance of its terms.  The rejection in advance of additional or different terms would be relevant to a § 2-207(2) if we treat Axiall as the offeror, but the court does not do so and provides no discussion of the Louisiana analog to § 2-207(2).

The court gives only slight consideration to treating Axiall’s purchase order as the offer.  It cannot act as the offer because, the court tells us, MECS’s confirmation form explicitly conditions acceptance on an additional arbitration clause.  That may be true, but the court has not provided the language at issue, and Article 2601 requires not just conditional acceptance but acceptance made conditional on the offeror’s acceptance of the additional or different terms.  Without the language from MECS’s forms, we cannot know if they fall within Article 2601’s exception to the general rule treating expressions of acceptance as sufficient. 

If there is no contract formed through communications under Article 2601, Article 2602, which is just like the UCC’s 2-207(3), applies: the contract consists of the terms on which the parties agreed and any additional terms provided by “applicable provisions of the suppletive law.”  In this case, that means that the arbitration clause drops out and plaintiff is free to bring its litigation in court.

For all my quibbling, I think the result is likely correct. I can’t see only one way to do a battle of the forms analysis the result of which would be the inclusion of the arbitration clause.  If it came in the offer, it would only survive if the court were to conclude that the language in Axiall’s purchase order did not properly condition acceptance on assent to its terms.  If it came in the acceptance, it is clearly precluded by the language in Axiall’s purchase order.