In Filanto, S.P.A. v. Chilewich International Corp., Filanto (hereinafter referred to as the manufacturer or the plaintiff) attempted to avoid an arbitration clause included an offer to purchase (for footwear), given by Chilewich, (hereinafter referred to as the defendant or the "importer") to Filanto.

The following exchanges of correspondence took place between the parties.

1. An offer from the importer to the manufacturer dated July 27, 1989, offering to buy goods from the manufacturer. This offer included an arbitration clause that the importer intended to apply to the transaction.

2. A subsequent letter dated September 2, 1989, from the manufacturer to the importer, accepting the offer to sell the footwear to the importer, but excluding the arbitration clause from applying to the transaction.

3. A Memorandum Agreement dated March 13, 1990, from the importer to the manufacturer, confirming the transaction, but indicating that the arbitration clause shall be part of contract.

The manufacturer did not sign and return the Memorandum Agreement at this point in time.

Two months later on May 7, 1990, the importer (pursuant to a provision in the previous correspondence), opened a letter of credit (a form of guaranteeing payment in an international sales of goods transaction) in the manufacturer's favor, which the manufacturer accepted.

4. A letter from the manufacturer to the importer dated July 23, 1990, indicating that the arbitration clause would not apply to the transaction.

5. Five months later on August 7, 1990, the manufacturer returned the Memorandum Agreement (referred to in item 3 above), attaching a letter, again excluding the arbitration clause from the transaction.

6. The agent for the importer (Chilewich) sent a letter to the manufacturer (Filanto) containing the arbitration clause.

7. The manufacturer (Filanto) sent to the importer (Chilewich) on June 21, 1991, a letter which stated that some of the footwear was defective.

The importer wishes that there be a valid contract. What does the importer argue to say a valid contract exists?

The manufacturer wishes that there not be a valid contract because the manufacturer does not wish to be subject to the arbitration clause. What does the manufacturer argue to say a valid contract does not exist?