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The Carpet Mart originally brought this action in a Tennessee state trial court, seeking compensatory and punitive damages in the amount of $450,000 from Collins & Aikman for the latter’s alleged fraud, deceit, and misrepresentation in the sale of what were supposedly carpets manufactured from 100% Kodel polyester fiber. The Carpet Mart maintains that in May, 1970, in response to a customer complaint, it learned that not all of the carpets were manufactured from 100% Kodel polyester fiber but rather some were composed of a cheaper and inferior carpet fiber. After the cause was removed to the District Court on the basis of diversity of citizenship, Collins & Aikman moved for a stay pending arbitration, asserting that The Carpet Mart was bound to an arbitration agreement which appeared on the reverse side of Collins & Aikman’s printed sales acknowledgment forms. Holding that there existed no binding arbitration agreement between the parties, the District Court denied the stay…

The primary question before us on appeal is whether the District Court, in denying Collins & Aikman’s motion for a stay pending arbitration, erred in holding that The Carpet Mart was not bound by the arbitration agreement appearing on the back of Collins & Aikman’s acknowledgment forms…
In each of the more than 55 transactions, one of the partners in The Carpet Mart, or, on some occasions, Collins & Aikman’s visiting salesman, telephoned Collins & Aikman’s order department in Dalton, Georgia, and ordered certain quantities of carpets listed in Collins & Aikman’s catalogue. There is some dispute as to what, if any, agreements were reached through the telephone calls and through the visits by Collins & Aikman’s salesman.

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