Data

Date:: 11-04-2025
Country:: USA
Number:: 24-2136
Court:: U.S. Court of Appeals (7th Circuit)
Parties:: Garage Door Systems, LLC v. Blue Giant Equipment Corp.

Keywords

INTERPRETATION OF STATEMENTS AND CONDUCT - ACCORDING TO PARTY'S OWN INTENT WHERE OTHER PARTY KNEW OF SUCH INTENT (ART. 8(1) CISG)

INTERPRETATION OF STATEMENTS AND CONDUCT - ACCORDING TO UNDERSTANDING OF REASONABLE PERSON OF THE SAME KIND AS OTHER PARTY IN SAME CIRCUMSTANCES (ART. 8(2) CISG)

INCORPORATION OF STANDARD TERMS - CISG RULES ON CONTRACT FORMATION AND INTERPRETATION APPLICABLE

INCORPORATION OF STANDARD TERMS - THE OTHER PARTY MUST HAVE A REASONABLE OPPORTUNITY TO TAKE NOTICE OF THEM - REFERENCE TO CISG-AC OPINION No. 13

Abstract

[Draft abstract prepared by Leyla Ebrahimi, La Sapienza University of Rome]

A U.S. company purchased multiple dock levelers from a Canadian manufacturer over the course of a year. The contract formation process, conducted primarily via email, followed a consistent pattern. After the buyer expressed interest in purchasing levelers, the seller responded with a price quote that included a link to its website referencing its “current terms and conditions.” Those terms required all contract-related disputes to be resolved through arbitration in Ontario, Canada. Based on the price quote, the buyer sent a purchase order specifying the quantity, item price, and shipping and tax costs. The seller then replied with an order confirmation, which reiterated the purchase order details and added terms related to shipping and payment. Shortly after installation, the buyer reported defects in the dock levelers. Despite multiple repair attempts by the seller, the problems persisted. The buyer ultimately purchased replacement levelers from another company and filed suit in U.S. District Courts under diversity jurisdiction, alleging breach of contract and breach of warranty. The seller moved to dismiss for improper venue, invoking the arbitration clause in its standard terms.
The District Court denied the motion, finding that the seller's standard terms had not been validly included into the contract. The U.S. Court of Appeals for the Seventh Circuit reversed.

First, the Appellate Court ruled that the contract was governed by CISG as per its Art. 1(1)(a). Also, the Court emphatized that the parties had agreed that the seller’s confirmation of order was a counter-offer which the buyer accepted.

As to the merits, the Court rejected the buyer’s claim that the reference by the seller to the website on which its standard terms could be retrieved did not adequately showed its intention to have them incorporated into the contract. By relying on CISG Advisory Opinion no. 13 and previous decisions, the Court noted that while the seller bears the burden of taking reasonable steps to make the buyer aware of its standard terms, incorporation under the CISG may be either express or implied. That is, express language is not required if the standard terms accompany the offer and are sufficiently clear and accessible to a reasonable person within the meaning of Art. 8 CISG.

In the Court’s view, the seller had clearly expressed its intent to have the contract governed by its standard terms by providing them with its offer and referencing them prominently—legibly placed at the center of the confirmation order, with a direct link to the text of the relevant terms. Under these circumstances, the buyer could not simply disregard the terms or the clear reference to them. Additionally, the Court noted that the seller had previously brought the terms to the buyer’s attention by referencing and linking to them in earlier price quotes.

Considering the foregoing, the Court held that the arbitration clause was binding and declined jurisdiction, instructing the parties to resolve the dispute through arbitration.

•

Fulltext

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Overhead Door Company of Indianapolis contracted with Blue Giant Equipment Corporation, a Canadian company, for the purchase of multiple dock levelers. When issues with the levelers arose after installation, Overhead sued Blue Giant in federal court under diversity jurisdiction for breach of contract and warranty. Blue Giant moved to dismiss, pointing to a provision in the standard terms listed on its website that requires parties to arbitrate disputes in Ontario, Canada. The district court denied the motion, concluding that the standard terms were not incorporated into the parties’ contract. We disagree and reverse.
I
Overhead Door Company of Indianapolis is a U.S. company that services, repairs, and replaces residential and commercial garage doors. Blue Giant Equipment Corporation is a Canadian company that manufactures dock levelers, which bridge the gap between a trailer and a dock during the loading and unloading process. Over the course of a year, Overhead purchased several dock levelers from Blue Giant.
Overhead and Blue Giant’s contracting process took place primarily over email and proceeded as follows: When Overhead expressed interest in purchasing levelers, Blue Giant responded with a price quote. Located at the bottom of the price quote was a brief instruction to refer to Blue Giant’s website for «current terms and conditions,» accompanied by a link to the website. Based on this quote, Overhead sent a Purchase Order that included the quantity of goods it wished to buy, the price per item, and the pricing for shipping and taxes. Blue Giant responded with an Order Acknowledgement form, which reiterated the information
contained in the Purchase Order and included additional terms relating to shipping and payment. A text box in the center of the Order Acknowledgement contained the following
language:
This document confirms receipt of your purchase order. All Equipment orders must be confirmed by the customer within 24 hours. Send acceptance to
orderentry@bluegiant.com. Only Orders that have been confirmed will be scheduled for Manufacturing. All Parts orders, unless specified in the purchase order, will be
shipped as soon as the part becomes available. Terms and Conditions can be found at www.bluegiant.com/about-us/terms.
The Terms and Conditions on Blue Giant’s website contained an arbitration clause requiring that all contractual disputes be resolved through binding arbitration in Ontario, Canada.
Overhead confirmed its receipt and acceptance of the Order Acknowledgement via email.
Blue Giant supplied the dock levelers to Overhead pursuant to their agreement. Soon after installation, however, Overhead began to complain that the levelers were not performing as promised. Blue Giant made several attempts to repair the levelers, but its efforts proved
unsuccessful, and Overhead eventually purchased replacement levelers from another company. After attempts at mediation broke down, Overhead sued Blue Giant in district court under diversity jurisdiction, asserting various breach of contract and breach of warranty claims. Blue Giant moved to dismiss for improper venue, arguing that Overhead was bound to arbitrate the dispute in Canada per the standard terms referenced in the Order Acknowledgement. The district court denied the motion to dismiss, finding that the mere
reference to standard terms contained on a website was insufficient to incorporate the terms into the parties’ contract. This appeal followed.
II
(...)
III
Having resolved these threshold issues, we turn our attention to the merits. The parties agree that Blue Giant’s Order Acknowledgement was a counteroffer which Overhead accepted, making the terms of the Order Acknowledgement the operative agreement. The heart of the parties’ disagreement is whether Blue Giant’s reference in the Order Acknowledgement to the Terms and Conditions located on its website was sufficient to incorporate these terms (and
the arbitration provision therein) into the contract.
A
Both parties agree that their contract is governed by the United Nations Convention on Contracts for the International Sale of Goods, Apr. 11, 1980, S. Treaty Doc. No. 98–9 (1983), 1489 U.N.T.S. 3 (CISG). The CISG applies to contracts for the sale of goods between businesses located in different treaty countries. Art. 1(1). «As a self-executing treaty between the United States and other signatories, including Canada, the Convention supersedes state law when it
applies.» VLM Food Trading Int’l, Inc. v. Ill. Trading Co., 748 F.3d 780, 787 (7th Cir. 2014) (citation omitted) (cleaned up). In addition to the text of the CISG, both parties rely on
interpretive guidance from the CISG Advisory Council; we too find the Advisory Council’s guidance helpful to our analysis.
Under the CISG, we interpret the statements and conduct of Blue Giant according to its intent where Overhead «knew or could not have been unaware what that intent was.» Art. 8(1).
Otherwise, Blue Giant’s statements are interpreted according to «the understanding that a reasonable person of the same kind as [Overhead] would have had in the same
circumstances.» Art. 8(2). In performing this analysis, «due consideration is to be given to all relevant circumstances of the case including the negotiations, any practices which the parties have established between themselves, usages and any subsequent conduct of the parties.» Art. 8(3).
These general interpretive principles apply with equal force to the inclusion-by-reference of standard terms. Advisory Council of the CISG, Opinion No. 13, «Inclusion of Standard Terms
Under the CISG,» 2 (Jan. 20, 2013). «Standard terms are included in the contract where the parties have expressly or impliedly agreed to their inclusion at the time of the formation of. the contract and the other party had a reasonable opportunity to take notice of the terms.»
Id. Accordingly, it was Blue Giant’s responsibility to ensure the reference to their standard terms was not «hidden away» and instead was «set out in a manner and at a place where a reasonable contractual party would have noticed [it].» Id. at 15. As the Advisory Council recognizes, it is now «commonplace» for commercial parties engaged in contract negotiations to refer to standard terms contained on a website. Id. at 13. In such cases, the other party will typically have reasonable opportunity to take notice of terms that are accessible over the internet at the time of contracting. Id. When parties negotiate via email, it will also generally suffice for notice purposes «if the standard terms ..․ can be accessed by clicking on a hyperlink leading to the applicable terms.» Id.
B
Overhead argues that the reference in the Order Acknowledgement to Terms and Conditions on Blue Giant’s website did not convey Blue Giant’s intent to incorporate these terms into the parties’ contract. We disagree. To begin, we observe that Overhead could have immediately resolved any uncertainty as to the relevance of the Terms and Conditions by simply reading them. The very first sentence of the Terms and Conditions states: «These General terms and conditions of the Sale ..․ as supplemented by any additional Sales terms ..․ are collectively the entire agreement between the Buyer and Blue Giant regarding the sale of products.» And there is «nothing in the CISG ․.. that signals any retreat from the proposition that parties who sign contracts will be bound by them regardless of whether they have read them.» See MCC- Marble Ceramic Ctr., Inc. v. Ceramica Nuova d’Agostino, S.p.A., 144 F.3d 1384, 1387 n. 9
(11th Cir. 1998).
Nevertheless, Overhead maintains that this case is not about its failure to read but about Blue Giant’s failure to write – specifically, Blue Giant’s failure to expressly state that the standard terms formed part of the contract. Though Overhead acknowledges that the CISG does not require specific magic words or incorporating phrases, it urges that a party must still clearly express its intent to incorporate standard terms through words. But under the CISG, parties can agree to the inclusion of standard terms either expressly or impliedly. Opinion No. 13 at 2.
Express incorporating language is therefore unnecessary when standard terms are provided alongside the offer and are sufficiently conspicuous or noticeable to a reasonable person. Id.
Indeed, the Advisory Council favorably cites a case from the Eastern District of California in which a party emailed an offer in the form of a sales quote with general conditions attached as a separate document. See Golden Valley Grape Juice & Wine, LLC v. Centrisys Corp., No. CV F 09-1424, 2010 WL 347897 (E.D. Cal. Jan. 22, 2010). Though the sales quote itself contained no language incorporating the attached general conditions, the court concluded that they were provided contemporaneously and were thus clearly intended as part of the offer. Id. at *5. By contrast, the Advisory Council criticizes a French case in which a court found that the lack of an incorporation clause on the front side of an order form rendered the standard terms printed on the reverse side unincorporated. This decision was problematic,
the Advisory Council explains, because the court neglected to consider «whether the writing on the back of the order form was conspicuous … or whether a reasonable person in the position of the seller would have noticed such terms on the back of this document.»

To be sure, Blue Giant’s intent to incorporate the Terms and Conditions would have been clear beyond any doubt had the Order Acknowledgement stated that the agreement was subject to or incorporates by reference the terms contained on the website. But as the preceding cases illustrate, parties need not expressly state their intent to incorporate separate standard terms when this intent is otherwise obvious. And Blue Giant did enough here to make its intent clear. It provided the standard terms contemporaneously with its offer, and the reference to them was neither «hidden away» nor printed «in such a manner that it [was] easy to overlook.» Id. at 15. The reference was printed legibly in a text box in the very center of the Order Acknowledgement form, a place «where a reasonable contractual party would have noticed [it].» Id. Under these circumstances, Overhead was not entitled to simply ignore the terms nor Blue Giant’s conspicuous reference to them.
In reaching this conclusion, we are particularly mindful of the CISG’s instruction to interpret Blue Giant’s conduct and statements according to how a reasonable party «of the same kind» as Overhead would have understood them. Art. 8(2). Overhead is a commercial entity that presumably contracts regularly with other businesses. It strains credulity that a sophisticated commercial actor would see a reference to Terms and Conditions during a business negotiation and fail to understand that the terms were intended to apply to the contract.
Moreover, the Order Acknowledgement was not the first time the standard terms were brought to Overhead’s attention: Blue Giant also mentioned (and linked to) its Terms and
Conditions in its earlier price quotes. It should have been evident to Overhead that Blue Giant was providing the terms because it considered them relevant to the agreement being negotiated – why else would Blue Giant have repeatedly referenced the terms throughout the negotiating process?
Overhead likens this case to CSS Antenna, Inc. v. AmphenolTuchel Electronics, GmbH, 764 F. Supp. 2d 745 (D. Md. 2011), in which a district court applying the CISG found that the following reference failed to incorporate standard terms: «Our general conditions of delivery can be viewed or downloaded as.pdf [sic] file from our homepage:
http://www.amphenol.de.» Id. at 754. But, unlike here, the reference to standard terms in CSS Antenna was misleading, describing the separate terms as «conditions of delivery.»
A reasonable party might not have understood from this statement that these were, in fact, general terms (including a forum selection clause) that applied to the entire purchase. Id.
Overhead argues that similar ambiguity was present here because Blue Giant’s reference to standard terms is preceded by a sentence about shipment timing. But this is hardly the most sensible interpretation of the Order Acknowledgement’s text. The paragraph referring to standard terms opens with: «This document confirms receipt of your purchase order.» Each subsequent sentence relates to a different aspect of the order, offering instructions on how orders must be confirmed and accepted and explaining how shipment will proceed upon order confirmation. Evaluated in context, there is no reason to think that the final sentence of this paragraph («Terms and Conditions can be found at www.bluegiant.com/about-us/terms.») does not likewise relate to the purchase order as a whole.
Finally, Overhead claims that no evidence shows that it had actual knowledge of the terms – or even ever saw them. This argument might carry more weight had the terms themselves been available only upon request or had Blue Giant merely directed Overhead to a generic homepage that «need[ed] to be navigated in order for the standard conditions to be located.» Roser Techs., Inc. v. Carl Schreiber GmbH, No. 11cv302, 2013 WL 4852314, at *9 (W.D. Pa. Sept. 10, 2013). But that is not what happened here. By providing a direct link to the text of the relevant terms, Blue Giant gave Overhead reasonable opportunity to take notice of them.
If Overhead overlooked or opted not to view the terms and thus lacked actual knowledge of them, that fact alone cannot release it from its obligations.
* * *
To a party in Overhead’s position, Blue Giant’s intent in referencing and linking to its Terms and Conditions should have been reasonably clear. Under the CISG, a sophisticated
commercial actor may not ignore conspicuous references to standard terms – as well as the text of the terms themselves – and then evade its contractual obligations by disclaiming knowledge of them. Because the standard terms were incorporated into the contract, the parties are obligated to resolve their dispute in accordance with the arbitration provision contained in the Terms and Conditions. Accordingly, we reverse and remand for further proceedings consistent with this opinion.
Reversed and remanded.}}

Source

Original in English:
- available at www.cisg-online.org}}