Columbia Hyundai, Inc. v. CARLL HYUNDIA, INC.
326 S.C. 78, 34 U.C.C. Rep. Serv. 2d (West) 33, 484 S.E.2d 468 (1997)
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Rule of Law:
The Uniform Commercial Code’s Section 2-207, designed to address the “battle of the forms” in transactions involving standardized agreements, does not apply to contracts that are the result of extensive, detailed negotiations between parties and their attorneys.
Facts:
- In early 1993, Columbia Hyundai, Inc. (Gibbes) began negotiations with Carll Hyundai (Carll) to purchase Carll’s Hyundai automobile dealership.
- The parties and their attorneys engaged in several months of negotiations, exchanging and revising numerous drafts of a proposed contract.
- On July 20, 1993, Carll submitted an “Agreement for Purchase and Sale of Assets” to Gibbes, which included a provision stating it could only be amended by a written instrument signed by both parties.
- Paragraph 1(a) of the agreement specified the transfer of “All of Seller’s right title and interest in and to all saleable new Hyundai vehicles in existence at the close of business on the last business day before final closing date.”
- Gibbes signed the agreement but added the words “current year” to Paragraph 1(a), modifying it to read “all saleable current year new Hyundai vehicles.”
- One week later, Carll received the altered agreement from Gibbes and advised that the modification constituted a rejected “counter-offer.”
- The alteration was critical to Carll because it intended to finance $600,000 in new vehicles for Gibbes until Gibbes was approved as a Hyundai dealer, and if Gibbes was not obligated to purchase future year vehicles, Carll could face significant losses by selling them at a reduced price.
Procedural Posture:
- Columbia Hyundai, Inc. (Gibbes) instituted a suit against Carll Hyundai (Carll) in a trial court for breach of contract and specific performance.
- The trial judge submitted the issue of whether a contract existed to the jury.
- The jury found that there was no contract between Gibbes and Carll.
- Gibbes appealed the trial court's decision.
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Issue:
Did the trial court err in declining to direct a verdict for Columbia Hyundai, Inc., on the grounds that a contract was formed as a matter of law under UCC Section 2-207, thereby improperly submitting the issue of contract existence to the jury?
Opinions:
Majority - WALLER, Justice
No, the trial court did not err in failing to direct a verdict for Gibbes, as UCC Section 2-207 was inapplicable under the specific facts of this case. The court reasoned that Section 2-207, intended to abrogate the common law’s “mirror image” rule for the “battle of the forms” involving standardized agreements, is not meant for situations where parties extensively negotiate and revise each provision of a contract. In this case, Gibbes and Carll engaged in months of detailed negotiations, exchanging multiple drafts through their attorneys, and the agreement itself contained a negotiated provision requiring written, signed amendments. This context indicated a series of specific contract negotiations, not a “battle of the forms” where preprinted documents with boilerplate language are exchanged. Therefore, common law principles requiring a “meeting of the minds” on all essential terms applied, and the issue of contract existence was appropriately decided by the jury.
Analysis:
This case significantly limits the scope of UCC Section 2-207, clarifying that its application is confined primarily to scenarios involving the exchange of standardized forms and boilerplate language (the 'battle of the forms'). By distinguishing between such scenarios and those involving extensive, deliberate negotiations of specific terms, the court reinforces the enduring relevance of common law contract principles, particularly the 'mirror image' rule and 'meeting of the minds' requirement, for complex, individually tailored agreements. This decision provides critical guidance for parties involved in sophisticated business transactions, emphasizing that deviations from negotiated terms during an acceptance phase will likely revert to common law counter-offer analysis rather than triggering UCC 2-207's rules for additional terms.
