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Richardson v. Union Carbide Indus. Gases, Inc. - 347 N.J. Super. 524, 790 A.2d 962 (Super. Ct. App. Div. 2002)

Rule:

Where clauses on confirming forms sent by both parties' to a contract conflict, each party must be assumed to object to a clause of the other conflicting with one on the confirmation sent by himself. As a result, the requirement that there be notice of objection which is found in N.J. Stat. Ann. § 12A:2-207(2) of the Uniform Commercial Code (UCC), N.J. Stat. Ann. §§ 12A:1-101 to 11-108, is satisfied and the conflicting terms do not become a part of the contract. The contract then consists of the terms originally expressly agreed to, terms on which the confirmations agree, and terms supplied by the UCC, including § 12A:2-207(2).

Facts:

The buyer (defendant-respondent Hoeganaes Corporation) had purchased from seller (defendant-appellant Rage Engineering) various systems and parts for the furnace that later exploded. The seller's written proposals or offers for the items and the buyer's subsequent purchase orders accepting the items contained conflicting indemnification provisions. Seller Rage filed a motion for summary judgment seeking contractual indemnification from buyer Hoeganaes Corporation. Hoegenaes cross-moved for summary judgment, seeking the dismissal of seller Rage's cross-claim for contractual indemnity. The trial judge granted Hoegenaes' motion and dismissed Rage's claim for indemnification. On appeal, Rage argued that the trial court erred in implicitly applying the "knock-out" rule to find that the contract did not include the seller's indemnity provision, and in analyzing the case under N.J. Stat. Ann. § 12A:2-207(3) of the Uniform Commercial Code (UCC), N.J. Stat. Ann. §§ 12A:1-101 to 11-108, instead of N.J. Stat. Ann. § 12A:2-207(2) of the UCC.

Issue:

Did the trial court err in implicitly applying the "knock-out" rule to find that the contract did not include the seller's indemnity provision, and in analyzing the case under N.J. Stat. Ann. § 12A:2-207(3) of the Uniform Commercial Code (UCC), N.J. Stat. Ann. §§ 12A:1-101 to 11-108, instead of N.J. Stat. Ann. § 12A:2-207(2) of the UCC?

Answer:

No

Conclusion:

Affirming, the New Jersey appellate court adopted the "knock-out" rule where there are conflicting terms in contracts governed by the UCC. The effect of applying the "knock-out" rule is that the conflicting terms do not become part of the parties' contract, and the contract consists of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of the New Jersey UCC. Applying that rule to the contract at issue, the conflicting terms, including the indemnity clause, did not become part of the contract, which instead consisted of the terms on which the parties' writings agreed, together with any supplementary terms incorporated under any other provisions of the UCC, as per § 12A:2-207(3). Although defendant-appellant seller Rage's offer specifically limited acceptance to the terms of its offer, defendant-respondent buyer Hoeganaes' acceptance materially altered Rage's offer with respect to the issue of indemnification. Additionally, Hoeganaes' acceptance objected to any terms or conditions of the Rage offer that were different from or in addition to any of the terms of its own acceptance. Furthermore, the result would have been the same even under a § 12A:2-207(2) analysis. Thus, the buyer (defendant Hoeganaes) was properly granted summary judgment, dismissing the buyer's (defendant Rage Engineering Inc.) cross-claim for indemnification.

 

 

 

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