Gardner Zemke Co. v. Dunham Bush, Inc.

1993-NMSC-016, 115 N.M. 260, 850 P.2d 319

 

RULE:

On its face, N.M. Stat. Ann. § 2-207(1) provides that a document responding to an offer and purporting to be an acceptance will be an acceptance, despite the presence of additional and different terms. Where merchants exchange preprinted forms and the essential contract terms agree, a contract is formed under § 2-207(1). A responding document will fall outside of the provisions of § 2-207(1) and convey a counteroffer, only when its terms differ radically from the offer, or when acceptance is expressly made conditional on assent to the additional or different terms.

FACTS:

The contractor issued its order to the manufacturer for air-conditioning chillers. The manufacturer responded with its preprinted acknowledgment containing extensive warranty disclaimers and a provision deeming silence to be acquiescence to the terms of the acknowledgment. Without discussion of the discrepancies, the parties proceeded with the transaction. When the contractor sought warranty repairs, the manufacturer agreed to repair only upon assurance that it would be paid if the problems were not caused by manufacturing defects. The contractor refused and a third party was hired to repair the chillers. The contractor then filed suit against the manufacturer. The court held that the trial court erred in ruling that the manufacturer's acknowledgment was a counteroffer by not considering all of the relevant factors to that determination and remanded the case for reconsideration.

ISSUE:

May a purchase Order operate as a counteroffer, thereby providing controlling warranty terms under the contract formed by the parties?

ANSWER:

Yes.

CONCLUSION:

At common law, the "mirror image" rule applied to the formation of contracts, and the terms of the acceptance had to exactly imitate or "mirror" the terms of the offer. If the accepting terms were different from or additional to those in the offer, the result was a counteroffer, not an acceptance. Thus, from a common law perspective, the trial court's conclusion that the Dunham Bush Acknowledgment was a counteroffer was correct.

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