Information Sciences, Inc. v. Mohawk Data Science Corp.
| Decision Date | 16 February 1978 |
| Citation | 403 N.Y.S.2d 730,43 N.Y.2d 918,374 N.E.2d 624 |
| Parties | , 374 N.E.2d 624 INFORMATION SCIENCES, INC., Appellant, v. MOHAWK DATA SCIENCE CORP., Respondent. |
| Court | New York Court of Appeals Court of Appeals |
The order of the Appellate Division should be affirmed, with costs. Mohawk Data Sciences (Mohawk) entered into a contract with Information Sciences (Information) whereby it agreed to replace two of Information's computers with a modern central processing unit. Information allegedly relied on a representation by Mohawk that certain existing parts would be compatible with the new unit and when the conversion process encountered difficulties, Information returned the Mohawk components without payment. The present dispute then arose.
The contract contained the following arbitration clause: "The parties hereto agree that any controversy or claim arising out of this Agreement, other than default in the payment of any charges due hereunder, or any dispute arising out of the interpretation or application of this Agreement, which the parties hereto are unable to resolve, shall be settled by arbitration in Utica, New York, with the American Arbitration Association". Mohawk served a demand for arbitration asserting that there was an unjustified cancellation of the contract and a failure to comply with the contract terms, including certain payment provisions. Information instituted this proceeding to stay arbitration alleging that the dispute was not covered by the arbitration clause and that the clause itself was invalid because the entire contract was induced by fraud.
The agreement to arbitrate covered "any controversy or claim arising out of this Agreement * * * or any dispute arising out of the interpretation or application of this Agreement". The clause also included an exclusion for matters involving "default in the payment of any charges due hereunder". This exclusion does not encompass every claim or dispute which is evidenced by failure to make payment, else the exclusion would engulf the agreement to arbitrate, leaving it without meaning. This exclusion must be deemed to refer only to collection matters which arise after all the terms of the contract have been filled except payment. Read in this light, as indeed it must be, the demand for arbitration clearly presents a claim covered by the arbitration agreement.
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...and nowhere does the language of the note limit this express intention to arbitrate. In Information Sciences v. Mohawk Data Science Corp., 43 N.Y.2d 918, 403 N.Y.S.2d 730, 374 N.E.2d 624, where, as here, there was a broad arbitration clause, even a limitation thereon was construed so narrow......
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