Where a seller's acknowledgment materially alters the terms of the buyer's initial offer, the response is to be considered a counter-offer expressly conditioned on the buyer's assent to the additional terms. If the buyer then accepts the goods with knowledge of the conditions specified in the acknowledgment, the buyer becomes bound by the terms of the acknowledgment.
Plaintiff buyer filed an action for breach of express warranties, the implied warranty of merchantability, the implied warranty of fitness for a particular purpose, and unfair trade practices. The plaintiff is a manufacturer of paint and entered into an agreement for a specific shade of yellow paint for a railroad. The order forms contained exculpatory clause for the warranties and a specified damages provision in the event of breach. An issue arose in the agreement that the paint was the wrong viscosity; it was not able to be used in paint sprayers, making it unsatisfactory. The plaintiff sued, seeking damages and arguing that the exculpatory clauses were not incorporated into the contract, thereby establishing the defendant’s liability. At trial, defendant seller argued that the exculpatory clauses were valid and counterclaimed to recover the prices for goods sold. Both parties moved for summary judgment.
Is the plaintiff entitled to summary judgment on its claims?
In part, no. The court granted summary judgment in part, but held that the additional terms (exculpatory clauses) were not incorporated into the agreement.
The court considered this a battle of the forms analysis. The acknowledgment that the buyer received was not a counter-offer, but a proposal for additional terms. Thus, since the proposed additional terms materially altered the agreement, they did not become part of the contract. It further held that there were genuine issues of material fact surrounding the plaintiff’s specific allegations, thus it denied summary judgement for those claims. Finally, the court dismissed the defendant’s counterclaim seeking damages.