A federal district court in New York held that the inclusion of an arbitration agreement was not a material alteration under the UCC "battle of the forms" test where there is no indication of surprise or hardship because the party opposing arbitration was aware of the agreement and had not objected to it before.

In Colorado-Arkansas-Texas Distributing, L.L.C. v. American Eagle Food Products, Inc., No. 06 Civ.1937, 2007 WL 4233010 (S.D.N.Y. Nov. 30, 2007), Colorado-Arkansas-Texas Distributing (CAT) regularly purchased nuts from American Eagle Food Products (AEF) by oral agreement, as is common in the industry. These oral agreements were confirmed in written sales orders containing an arbitration agreement. CAT sometimes signed the sales orders and returned them to AEF, although it did not always do so. At issue in this case were several orders from February.

AEF initiated arbitration regarding a dispute with the orders and an award was issued in its favor. CAT attempted to enjoin the arbitration and AEF counterclaimed for confirmation of the award. In opposing confirmation, CAT argued that it never agreed to arbitrate.

The Court rejected CAT's argument that it had not agreed to arbitrate because it had not signed the February sales orders. Looking to the UCC "battle of the forms" test, the Court held that the inclusion of the arbitration clause in the written confirmation of the parties' oral agreement did not constitute a material alteration and was therefore incorporated into the parties' agreement.

CAT did not meet its burden of proving that the arbitration agreement was a material alteration. There was no evidence to show that incorporation of the agreement without the express consent of CAT would impose any surprise or hardship. CAT was familiar with the language of the arbitration agreement and had not objected to it before. In fact, CAT acted as if it expected to arbitrate the dispute, prior to filing this suit.

The Court also rejected CAT's argument that no agreement resulted from the February orders because the sales orders were not signed and returned. An arbitration agreement does not have to be signed. Accordingly, the Court confirmed the award.