Egan Machinery Co. v. Mobil Chemical Co.
660 F. Supp. 35 (1986)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
For an acceptance containing additional or different terms to be deemed a counteroffer under UCC § 2-207(1), the acceptance must explicitly declare the offeree's unwillingness to proceed with the transaction unless it is assured of the offeror's assent to the new terms. Language that merely presumes acceptance of new terms upon silence is insufficient to prevent contract formation.
Facts:
- In response to a request from Mobil Chemical Co. (Mobil), Egan Machinery Co. (Egan) submitted quotations for a precoater machine in April 1973, which did not include conditions of sale.
- On May 2, 1973, Mobil submitted a Requisition/Purchase Order for the precoater, which included language stating: "this order expressly limits acceptance to terms stated herein, and any additional or different terms proposed by the seller are rejected unless expressly agreed to in writing."
- On May 8, 1973, Egan sent an Order Acknowledgment that stated: "This order is accepted on the condition that our Standard Conditions of Sale...are accepted by you...Receipt of this acknowledgment by you without prompt written objection thereto shall constitute an acceptance of these terms and conditions."
- Egan's attached Standard Conditions of Sale included a provision requiring Mobil to indemnify Egan for any liability incurred from personal injuries connected with the operation of the equipment if Mobil failed to follow safety procedures.
- The parties proceeded with the transaction, and the precoater was delivered to Mobil.
- In October 1977, an employee of Mobil was injured while operating the precoater purchased from Egan.
Procedural Posture:
- An employee of Mobil Chemical Co. sued Egan Machinery Co. (Egan) for injuries sustained while using Egan's equipment.
- That personal injury lawsuit culminated in a stipulated judgment where Egan's insurer paid the Mobil employee $75,000.
- Egan then filed this action against Mobil in the United States District Court for the District of Connecticut, seeking indemnification for the settlement payment.
- Mobil filed an initial motion for summary judgment, which the court denied without prejudice.
- Mobil filed a renewed motion for summary judgment, which is the subject of the present opinion.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Under UCC § 2-207, does an additional indemnity term in a seller's acknowledgment form become part of a contract when the buyer's initial purchase order expressly limits acceptance to the terms stated therein and rejects any additional terms?
Opinions:
Majority - Thomas P. Smith, United States Magistrate
No. An additional indemnity provision in a seller's acknowledgment form does not become part of the contract when the buyer's offer expressly limits acceptance to its own terms. First, a contract was formed by the exchange of forms because Egan's conditional acceptance clause was not sufficiently explicit to function as a counteroffer under UCC § 2-207(1). Following the precedent in Daitom, Inc. v. Pennwalt Corporation, such a clause only prevents contract formation if it clearly and unambiguously declares the party's unwillingness to proceed with the transaction without assent to the new terms. Egan's clause, which presumed acceptance upon silence, did not meet this high standard. Second, because a contract was formed, the court must determine if the additional indemnity term became part of it under § 2-207(2). Mobil's purchase order, which was the offer, expressly limited acceptance to its terms under § 2-207(2)(a). This explicit limitation prevented Egan's additional indemnity term from being incorporated into the contract.
Analysis:
This decision reinforces a strict interpretation of the UCC § 2-207(1) 'proviso,' requiring an offeree to use unmistakably clear language to convert an acceptance into a counteroffer. It demonstrates that boilerplate language making acceptance 'conditional' on the offeree's terms is often insufficient to prevent contract formation on the offeror's terms. Furthermore, the case highlights the power of an offeror's clause that expressly limits acceptance to the offer's terms, creating a strong defense against the inclusion of any additional terms proposed by the offeree. This provides a clear drafting strategy for buyers seeking to control the terms of a contract in a 'battle of the forms' scenario.
Unlock the full brief for Egan Machinery Co. v. Mobil Chemical Co.