CUC Business Law Home Basket Co LLC v Pampered Chef Ltd Case Paper

CASE BRIEF 11.6

Home Basket Co., LLC v. Pampered Chef, Ltd.

55 UCC Rep.Serv.2d 792 (D. Kan. 2005)

Analyze the case and respond to the questions at the end of the case. Consider the new UCC regarding e-commerce transactions In this case, the court referred the case to arbitration, however, in your paper, discuss the issues that the court would have had to consider if it had not gone to arbitration.

In addition, discuss the history of e-commerce and the social trends that have impacted the changes in the UCC laws. Finally, consider an example of how e-commerce laws have impacted your own life.

iStockPhoto.com/Photoevent
does not know it
to establish that all of the messag
acknowledging receipt does not mean that all
Sellers generally accomplish these two goals by establishing
on their websites
offeror
simply lists all the terms of the agreement that the visitor/offeree is about to enter
“clickon,” “clickthrough,” or “clickwrap” agreements. The company or
or she cannot proceed to the completion of the contract segments of the site. The
into. The visitor/offeree must click on “I agree” or “I agree to these terms,” or he
terms include cost, payment, warranties, arbitration provisions, and so on, and all
applicable terms must be spelled out in advance of the “I agree” click point.
Because this type of contract formation is so new, case law is rare, but
Home Basket Co., LLC. v Pampered Chef, Ltd. (Case 12.6) is one
contract-formed-on-the-Internet dispute.
example of a
CASE 11.6
FACTS
Home Basket Co., LLC. v
Pampered Chef, Ltd.
55 UCC Rep. Serv. 2d 792 (D. Kan. 2005)
Making a Basket Case
The Greenbrier Basket Company (GBC), a goods dis-
tributor (plaintiff) (seller) agreed in October 2003 to sell
woven baskets to The Pampered Chef (TPC) (defendant)
(buyer). On October 28, 2003, an executive sales agree-
ment was drafted but never signed by the parties. GBC
had, however, accepted purchase orders from TPC.
Cyndee Pollock (a manager at GBC) received offers
to purchase goods via e-mail from TPC and would then
tell an employee, Mark Beal, to accept these purchase
orders via TPC’s Internet site. GBC denies knowing
that there were terms and conditions, including a forum
selection clause, on TPC’s Internet acceptance site. TPC
sent Mark Beal an e-mail with an attachment showing
him how to use TPC’s purchase order management
system and included instructions regarding the use of
the purchase order management system, including, in
section 4, three paragraphs under the title “Accepting
and Rejecting Purchase Orders,” the following:
Clicking on the Accept P.O. button will cause the terms
and conditions of the purchase order to pop-up. The user
should review these terms and conditions and click the
Accept P.O. button at the bottom of the pop-up screen.
If the purchase order is not acceptable in it’s [sic]
current form, the user may click on the Reject and
Request Changes button. This causes a pop-up window
to appear where the user may enter a free-form text
describing the reason for rejecting the purchase order
and request changes that would make the purchase order
acceptable.
Clause 17 of the Terms and Conditions in TPC’s
purchase management order system states:
This Purchase Order shall be deemed to have been made
in Addison, Illinois USA and shall be governed by and
construed in accordance with the laws of State of Illinois
[sic]. The sole and exclusive jurisdiction for the purpose of
resolving any dispute shall be the United States District
Court, Northern District of Illinois, Eastern Division.
When disputes over orders and payments arose,
GBC filed suit against TPC in Kansas for breach of
contract. TPC moved to dismiss the suit for improp-
er venue (wrong geographic court; see Chapter 3)
because the terms of its purchase order called for suits
in Illinois. GBC maintains it did not agree to that term
because it never signed a contract and did not agree to
it via their Internet contract.
CONTINUEDe receipt of an
that the con-
for electronic
if the receiver
means of proof
Other because
their websites
ny or offeror
about to enter
terms,” or he
f the site. The
so on, and all
point.
is rare, but
example of a
the Reject and
op-up window
free-form text
purchase order
purchase order
Lons in TPC’s
es:
ave been made
verned by and
State of Illinois
the purpose of
States District
Division.
ments arose,
For breach of
for improp-
– Chapter 3)
lled for suits
to that term
not agree to
CONTINUED
JUDICIAL OPINION
BROWN, Senior J.
Chapter 11 Contracts and Sales: Introduction and Formation
Plaintiff does not dispute that the forum selection
clause is valid. Plaintiff instead argues that the forum
selection clause was never part of the parties’ contract.
TPC’s e-mails containing purchase order information
constituted an offer to buy baskets. The e-mails consist-
ed of information about the quantity of baskets to be
bought, price, shipment information and delivery dates.
None of the e-mails had any forum selection clause;
however, they did state a specific manner of acceptance:
1. Upon receipt of order, please acknowledge via Internet
at [website]. By acknowledging this P.O. [purchase
order), you also acknowledge the terms and conditions
of this P.O.
2. To accept this P.O. via Internet, visit [website].
The evidence shows at least nine such e-mail offers.
GBC consistently went to the TPC website to accept
these offers.
GBC makes several arguments, without supporting
case law, that the forum selection clause should not be
part of the parties’ contract. None of these arguments
dispute when acceptance was made.
Plaintiff first argues that the e-mail offers are
ambiguous because it did not alert GBC to the forum
selection clause that had to be accepted on the website.
The TPC e-mails state that the way to acknowledge
(i.e. accept) the purchase order was to go to the
website. The e-mail is not ambiguous as it also alerted
GBC that there were terms and conditions associated
with acknowledging the P.O. on the website.
GBC next argues that it should not be held to the
terms and conditions accepted on the website because
plaintiff thought that the e-mails’ terms and conditions
were all inclusive.
It is a well-established rule of law that contracting
parties have a duty to learn the contents of a written
contract before signing it, and such duty includes
reading the contract and obtaining an explanation of
its terms. The negligent failure of a party to read the
written contract entered into will estop the contract-
ing party from voiding the contract on the ground of
ignorance of its contents. Therefore, a party who signs
a written contract is bound by its provisions regardless
of the failure to read or understand the terms, unless
the contract was entered into through fraud, undue
influence, or mutual mistake.
In determining intent to form a contract, the test
is objective, rather than subjective, meaning that the
relevant inquiry is the “manifestation of a party’s
intention, rather than the actual or real intention.” Put
“the inquiry will focus not on the ques-
tion of whether the subjective minds of the parties have
another way,
met, but on whether their outward expression of assent
is sufficient to form a contract.”
393
This was a website that required action on the
part of GBC. Plaintiff objectively agreed to the forum
selection clause by scrolling through the terms and
conditions and clicking on the “Accept P.O.” button.
Plaintiff’s subjective beliefs that it was the e-mail and
not the website terms and conditions that governed
the contract are both misplaced and irrelevant. Plaintiff
was under a duty to read and understand the terms
and conditions prior to clicking the “Accept P.O.”
button as this was the formal acceptance required by
TPC’s offer to purchase baskets. Failure to read or
understand the terms and conditions is not a valid
reason to render those provisions nugatory.
Plaintiff next argues that the forum selection clause
should not be read into the contract because GBC rejected
an Exclusive Sales Agreement containing such a clause.
Plaintiff claims that the failure to sign this agreement shows
that they did not intend that a forum selection clause be
part of the contract. The evidence shows that the Exclusive
Sales Agreement was discussed on October 28, 2003. The
date of the first e-mail inviting GBC to accept a purchase
order was October 7, 2003. Plaintiff’s subjective reasons for
refusing to sign the Exclusive Sales Agreement are irrele-
vant as GBC consistently agreed, in an objective manner
prior to the Exclusive Sales Agreement, to contracts with
the terms and conditions on TPC’s website. The Court will
not alter the plain terms in the parties’ contract because
GBC refused to sign the Exclusive Sales Agreement.
Plaintiff also argues that there was no meeting of
the minds regarding the forum selection clause on the
website. A meeting of the minds requirement is proved
when the evidence shows with reasonable definiteness
that the minds of the parties met upon the same mat-
ter and agreed upon the terms of the contract. Part of
clause 17 states “each shipment received by Buyer from
Seller shall be deemed to be only upon the terms and
conditions as set forth in this Purchase Order…” GBC
agreed upon these terms and conditions published on
TPC’s website by clicking the “Accept P.O.” button and
this satisfied the meeting of the minds standard.
The Court holds that the forum selection clause in
the terms and conditions on TPC’s website are a part
of the parties’ contract. GBC must file suit in Illinois.
CASE QUESTIONS
1. Describe the ordering process between the two
parties.
2. Does it matter to the court that neither side ever
signed a written agreement?
3. What responsibility does the court impose on
those who use websites for contracting purposes?