Law School Case Brief
Babcock & Wilcox Co. v. Hitachi Am., Ltd. - 406 F. Supp. 2d 819 (N.D. Ohio 2005)
Ohio courts define an offer as a manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it. The Sixth Circuit states that a price quotation typically is considered an invitation for an offer, rather than an offer to form a binding contract. Along these same lines, it is most often the buyer's purchase order, submitted in response to such a quotation, that constitutes the offer. There are situations where courts find that a price quotation is sufficiently detailed as to amount to an offer. The inclusion of items such as a description of the product, price, quantity, and terms of payment may indicate that the price quotation is an offer rather than a mere invitation to negotiate. However, the determination of the issue depends primarily upon the intention of the person communicating the quotation as demonstrated by all of the surrounding facts and circumstances.
After the parties negotiated for several months, the seller, Hitachi America, Ltd. ("Hitachi"), forwarded a price quotation to the buyer, Babcock & Wilcox Company ("B&W"), and B&W subsequently forwarded a purchase order to Hitachi with different terms. Hitachi contended that its price quotation was the offer which B&W accepted through its purchase order, but B&W asserted that the purchase order was the offer which the seller accepted by shipping the catalyst.
Was the price quotation the offer which B&W accepted through its purchase order?
The court held that Hitachi’s price quotation was not intended by the parties to be an offer under the totality of the circumstances, and the purchase order constituted the offer which Hitachi accepted in accordance with the terms of the offer. Although the price quotation was fairly detailed, and B&W indicated its intent to purchase the catalyst, the parties continued to negotiate terms and conditions for six months after the quotation was received, and negotiations ceased after the purchase order was issued. Further, since the purchase order constituted the complete and final statement of terms, the contract included specific and general warranties with no limitation of liability, and there was no conspicuous disclaimer of the implied warranty of fitness.
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