18. What is the best advice the attorney can provide?

Under UCC § 2-207(1), a contract is formed upon: (1) A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms.

If a contract has been formed under § 2-207(1), the next step is to ascertain what terms are binding under § 2-207(2). UCC § 2-207(2) provides that additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless: (i) the offer expressly limits acceptance to the terms of the offer; (ii) they materially alter it; or (iii) notification of objection to them has already been given or is given within a reasonable time after notice of them is received.

In sum, if the deal is between merchants, then once an offer has been made, any new or additional terms included in the acceptance of that offer become part of the final agreement unless: the offer limits acceptance to only its own terms, the responding party objects to the additional or different terms within a reasonable time, or the additional or different terms materially alter the terms of the offer. An additional term is a material alteration if it «result[s] in surprise or hardship if incorporated without express awareness by the other party» or is an «unreasonable surprise.» UCC §2-207, Comment 4 and Comment 5.

Answer C is correct. Here, a contract was formed when the seller sent the acknowledgment because thus is a written confirmation under UCC § 2-207(1). As discussed above, once the offer is accepted, additional terms, such as the arbitration clause, become part of the deal unless the arbitration clause «materially» alters the deal. As such, a contract was formed when the seller mailed its acknowledgment, and the court must decide whether the arbitration term should be excluded as a material alteration of the contract. This answer choice directly addresses UCC § 2-207(1) and (2) and therefore is the correct answer.

A is incorrect. As mentioned above, under the UCC a contract is formed upon a «definite and seasonable expression of acceptance or a written confirmation the contract was formed.» Here, the contract was formed as soon as the seller mailed the buyer a signed form acknowledgment that agreed to the buyer's terms. This answer choice incorrectly states the contract was formed pursuant to conduct when the buyer received the nails. Moreover, the second part of this answer choice states, «a court would exclude the arbitration provision from the contract.» Whether the arbitration clause is part of the deal, however, hinges on whether a court finds this to materially alter the contract. This answer choice does not address whether the arbitration clause materially alters the deal.

B is incorrect. As discussed at length, a contract was formed when the seller mailed its acknowledgment pursuant to UCC § 2-207(1). This answer determines that the arbitration clause definitely became part of the deal. However, this answer does not address that it is up to the court to determine whether the arbitration provision materially alters the deal. As noted above, additional terms become part of the deal unless they materially alter the deal.

D is incorrect. This question is dealing with the sale of goods and therefore the UCC applies, rather than the common law which requires the acceptance to mirror the offer. Under the UCC, however, an offer is accepted and a contract is formed upon a definite and seasonable expression of acceptance or a written confirmation, sent within a reasonable time, even though it states additional terms from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms. As such, this answer is incorrect because it applies the more stringent mirror-image acceptance rules under common law.