The Hills ordered a Gateway computer by phone using a credit card. The computer arrived in a box containing written terms providing that the terms would govern unless the customer returned the computer within 30 days; one of those terms required arbitration. The Hills admitted noticing the statement of terms but said they did not read it closely enough to discover the arbitration clause. They kept the computer for more than 30 days and later sued Gateway over the computer's components and performance.
Issue
When a seller ships goods with terms enclosed in the box stating that the buyer accepts those terms by keeping the goods beyond a stated return period, are those terms part of the contract even though they were not recited during the initial phone order? More specifically, is the enclosed arbitration clause enforceable against buyers who kept the computer past 30 days?
Rule
Under the UCC, a seller as master of the offer may invite acceptance by conduct and may specify that acceptance occurs when the buyer keeps the goods after having an opportunity to inspect the item and the enclosed terms and reject them by returning the product. A contract need not be read to be effective, and arbitration clauses are not subject to any special requirement of prominence beyond ordinary contract principles.
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One of 10 multiple-choice questions for this case. Pick an answer to see why.
Nina Patel in Columbus orders a home espresso machine by phone from Riverstone Kitchen Systems, a fictional direct-sales company. The machine arrives with a booklet stating that all enclosed terms govern unless the customer returns the machine within 21 days; the booklet includes a clause requiring arbitration of all disputes. Nina notices the booklet, keeps the machine for six weeks, and then files suit in court over alleged defects.
Is the arbitration clause most likely enforceable?
Explanation. The majority held that a vendor, as master of the offer, may invite acceptance by conduct and may provide that keeping the goods beyond a stated return period manifests assent to enclosed terms. The key is that the buyer had an opportunity to inspect both the product and the terms and reject them by returning the product. Under that rule, Nina accepted by retaining the machine past 21 days, so the arbitration clause is part of the contract.