SW Legal Educational Publishing

Purchase Order Need Not Be Signed for There to Be Acceptance
Description Hong Kong buying agent accepted a contract, and its arbitration requirement, when it showed agreement by fulfilling the terms of a purchase order, rather than by signing the order.
Topic Sales
Key Words Agreement, Arbitration, International, UCC
C A S E   S U M M A R Y
Facts Kahn, a New York company, sent purchase orders to Lark, a Hong Kong company that acts as a buying agent in Asia, for assorted clothing for Sears. The orders contained an arbitration clause. Lark did not sign the orders but helped Kahn select producers in the Philippines to fill the orders. When the orders were botched, Kahn moved for arbitration of its dispute with Lark over payment. Lark asserted that there was no contract because it did not sign the orders, hence could not be made to comply with the arbitration clause.
Court Decision The parties are ordered to go to arbitration. There was a binding agreement. Under Section 2-206 of the UCC "an offer to make a contract shall be construed as inviting acceptance in any manner" and "an order or other offer to buy goods for prompt or current shipment shall be construed as inviting acceptance either by a prompt promise to ship or by the prompt or current shipment of conforming or non-conforming goods." Lark accepted by subcontracting for production of the goods, the shipment of which it monitored. Hence, the contract and its arbitration clause are presumed valid.
Citation Kahn Lucas Lancaster, Inc. v. Lark International Ltd., 1997 WL 458785, S.D.N.Y.

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