Mills, a grain distributor, sent an offer to sell five railroad cars of wheat to Global Supplies, (Global). The entire offer is contained on a signed form. The front side of the form contains Mills' name and address, along with blank spaces for the description of the goods, quantity, price, and delivery date. The blanks were filled in with the desired information. The following statement appears at the bottom of the front side of the form:
"Any contract resulting from the acceptance of this offer shall consist only of those terms appearing on the front and reverse sides of this document."
The reverse side of Mills' form has six paragraphs. Paragraph five reads as follows:
"Any disputes arising under this agreement shall be resolved through binding arbitration under the rules of the Commercial Arbitration Association."
Global responded to Mills' offer with its standard acceptance form.
Global's form contains its name, address, and company logo at the top of the page with the words "Purchase Order" just below. It has blank spaces for the description of the goods, quantity, price, and delivery date, which Global filled in with information matching the information on Mills' offer. Global Purchase Order form has five paragraphs on the back. Paragraph five states:
"The laws of the State of California shall govern this agreement and any claims or controversies arising during performance shall be resolved through proceedings in the courts of the State of California."
Global's Purchase Order form has a signature line at the bottom of the front side, but due to a clerical error the form sent to Mills was not signed. Soon after receiving Global's Purchase Order form, Mills purchased five railroad cars of wheat from local suppliers for shipment to Global. The week before any wheat is shipped to Global, the price of wheat falls sharply.
1. If Global informs Mills that it will not accept the five railroad cars of wheat, will Global be liable to Mills for breach of contract? Discuss.
2. Assume instead that Mills delivers the five railroad cars of wheat to Global, and Global pays to Mills the full contract price. If Global has a complaint about the quality of the wheat it received, must Global submit its claim to the Commercial Arbitration Association? Discuss.