Becker Autoradio v. Becker Autowerk

Becker Autoradio (Becker USA) (plaintiff) was an American corporation that entered an exclusive distribution agreement with the West German corporation Becker Autowerk (Becker Germany) (defendant) in 1974. The 1974 agreement was set to terminate in June 1976 but could be extended. An arbitration clause was included in the 1974 agreement, which provided that all disputes arising “out of and about” the 1974 agreement should be subject to arbitration. Becker USA and Becker Germany discussed extending the 1974 agreement but never signed any documents confirming an extension. In 1977 Becker USA sued Becker Germany in federal district court for breach of contract. Becker USA asserted that Becker Germany made an oral promise to extend the 1974 agreement for five additional years, contingent on the completion of certain terms by Becker USA. Becker USA asserted that the promise to renew was made prior to the June 1976 expiration date and that Becker USA had completed all the agreed-on preconditions. The preconditions were almost entirely related to the subject matter of the 1974 agreement. Except for the new expiration date, the full terms of the 1974 agreement were to be carried forward, including the arbitration clause. Becker Germany filed a motion to stay the district court proceedings and compel arbitration. The district court denied the motion. Becker Germany appealed, arguing that the dispute fell within the scope of the arbitration agreement. Becker USA argued that the dispute over whether the contract was extended did not involve a breach of the 1974 agreement or failure to comply with any right or obligation created by the 1974 agreement.