Question: Martin, a diamond wholesaler, writes Serge, a jewelry retailer, offering to sell 75 specified diamonds...

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Question: Martin, a diamond wholesaler, writes Serge, a jewelry retailer, offering to sell 75 specified diamonds for $2 million. Martin's offer sheet specifies the price, quantity, date of delivery, and other key terms. The sheet also states, "Offer is made on these terms and no other." Serge sends Martin his own purchase order, naming the diamonds, price, and so forth, but adding a clause requiring any disputes to be settled by a diamond-industry arbitrator. In the diamond industry, arbitration by such a person is standard. Martin does not object to the arbitration clause. Martin delivers the gems, but Serge refuses to pay the full price, claiming that many of the stones are of inferior quality. Martin sues for the balance due, but Serge insists that any dispute must be settled by arbitration. May Martin litigate or must he arbitrate the case? Strategy: Under the common law, there might not be a contract between these parties because Serge added a new term. However, this agreement concerns the sale of goods, meaning that the UCC governs. Under UCC 2-207, when both parties are merchants (as they are here), additional terms become part of the contract except in three instances. Review those three instances, and apply them here. Result: An additional term becomes part of the agreement unless the original offeror insisted on its own terms, the new term materially alters the offer, or the offeror promptly rejects the new term. Martin's offer insisted on its own terms, and Serge's arbitration clause does not become part of the agreement. Martin may litigate his dispute.