Yale Materials Handling v. White Storage

Citation: Yale Materials Handling Corp. v. White Storage & Retrieval Sys., Inc., 240 N.J. Super. 370, 573 A.2d 484 (1990).

Factual Background
Defendant-appellant White Storage & Retrieval Systems, Inc. (White) and Plaintiff-respondent Yale Materials Handling Corporation (Yale) entered into an agreement for the purchase and delivery of an automatic materials handling system. The agreement, which consisted of various documents executed throughout the negotiation process, included various letters sent between White and Yale, a purchase order issued by Yale giving the company the right to cancel the order, and a one-page “contract” signed by White on September 21, 1988 and by Yale eight days later on September 29th. The final paragraph of the one-page contract included explicit language informing the parties that the “Buyer and Seller agree that the contract is governed by: Attachment 9-Terms and Conditions. . . .” Attachment 9 that was referenced in the contract, also known as the Software License Agreement, provided that “any controversy or claim arising out of or relating to this agreement or the breach of it shall be settled by arbitration” and, in addition, put the seller on notice that “[the] agreement and its [attachments] contain the entire agreement between the parties hereto. . . .” (emphasis added).

Shortly after the contract was signed, Yale sought to cancel their order with White pursuant to the purchase order issued by the company in November 1988. After canceling the order, Yale brought suit against White seeking damages and a declaration that it properly cancelled the purchase order for a White automated materials handling system for failure to deliver in a timely manner. White made a motion to compel arbitration in accordance with “Software License Agreement.”

Trial Court Proceedings
The trial court ruled in favor of Yale concluding that the arbitration provision contained in the Software Licensing Agreement had “limited scope and significance” and limited itself to “the provisions of [the Software Licensing Agreement] and not the general broad perameters [sic] of the parties.” In addition, the trial court looked at the intention of the parties to integrate all of the various executed documents into the contract itself. In doing so, the court found that the “parties did not specifically agree with the provisions of arbitration in its broader scope apart from the Software Licensing Agreement”. Therefore, there was no agreement to arbitrate the entire contract, rather just events arising out of the Software Licensing Agreement itself. White filed a timely appeal of the trial courts decision and pleaded with the court to accept his argument that the various documents included in the agreement comprised a single, integrated contract.

Appellate Court Proceedings
On appeal, the Superior Court of New Jersey reversed the trial courts ruling. The appellate court held that Yale’s signature on the September 21st contract “for the following integrated and automated material handling system” signified assent of the expressly incorporated Software License Agreement that was referred to in the final paragraph of the contract.

Although Yale argued that the Software License Agreement arbitration clause dealt only with disputes that arose after the software had been delivered, the Superior Court of New Jersey determined that this interpretation was inconsistent with the language of the Software License Agreement, which set forth reasonable shipment obligations and set forth force majure limitations upon liability for delayed shipments. Due to Yale’s assent to the arbitration clause by way of signing the one-page contract and all other documents integrated pursuant to the agreement, the court found that the trial court erred in finding that the various documents included in the contracting process were not integrated.