No. The seller's form does not automatically win just because it was sent last. Instead of one side's rules winning, the court says the parts of the forms that disagree with each other get canceled out. The court got rid of an old rule that followed the 'last shot' idea (whoever sends the last form wins). The new rule is fairer because in real life, most companies don't read all the fine print on these forms. Since the companies acted like they had a contract, the court creates one for them using the parts they both agreed on (like price and quantity) and then fills in the gaps (like who is responsible) with standard, off-the-shelf rules from the law.

Yes, Ionics and Elmwood have a contract even though their forms have conflicting terms. The law says in this situation, we assume each side rejects the other side's conflicting terms. Those conflicting terms are not part of the deal. 

Instead, the contract includes only what Ionics and Elmwood agreed on, plus any normal legal gap-fillers. The court says its old rule from the Roto-Lith case was wrong. That rule let the seller's terms control just because the buyer took the goods. 

The court explains this old approach would undermine the law's goal. It would let the side that sends the last form unfairly dictate the terms and override the other side's form. The law meant to get rid of the old 'mirror rule' that an acceptance had to perfectly match the offer. 

So in this case, the law's subsection (3) applies because: (1) Elmwood's acknowledgment depended on Ionics agreeing to the new terms; (2) Elmwood's conflicting limit on liability didn't become part of the contract; and (3) Ionics and Elmwood acted like they had a contract. Therefore, the contract is the terms they both agreed to, plus the normal legal gap-fillers.

—relied on Official Comment 6 to § 2-207 in holding that subsection (3) applied "where the terms in the two forms are contradictory," the text of Comment 6 suggests such a scenario would actually fall within subsection (2), with each conflicting term constituting a notification of objection: Where clauses on confirming forms sent by both parties conflict each party must be …

Finding no principled basis on which to distinguish the circumstances in Ionics and Roto-Lith, we overruled Roto-Lith.

We need not address [choice of law], because the two states have adopted versions of [§ 2-207] that are virtually equivalent

As other courts have observed, "an acceptance which precisely follows § 2-207 (1) clearly forestalls contract formation."

In the ensuing appeal by Elmwood, we rejected the attempts by Ionics and the district court to distinguish Roto-Lith on its facts: "It would be artificial to enforce language [viz., the warranty disclaimer in the Roto-Lith invoices] that conflicts with background legal rules while refusing to enforce language [viz., the warranty disclaimer in the Ionics invoices] that conflicts with the …

W] here the terms in two forms are contradictory, each party is assumed to object to the other party's conflicting clause. As a result, mere acceptance of the goods by the buyer is insufficient to infer consent to the seller's terms

—an additional term proposed by a seller in acknowledgment of a purchase order conflicted with a seller's term and was not part of the contract)(overruling Roto-Lith, Ltd.

—effectively displaced Judge Hornby's summary judgment ruling as the law of the case, thereby precluding as a matter of law any consideration of the damages-limitation clause in construing the sales contracts between Adell and Chipco.

—finding that because the seller's acknowledgment was received prior to shipment of the goods and contained terms that contradicted terms in the buyer's purchase order, the parties' contract fell out of section 2-207 (1) and into 2-207 (3

Instead, the forwarding of such an invoice gives rise to a binding contract and in the event of a contract dispute the terms of the contract are determined under the test set forth in § 2-207 (3), which in turn implicitly incorporates the criteria in § 2-207 (2).

No. When a seller's acknowledgment form contains terms that materially alter and directly conflict with the buyer's purchase order, the seller's form does not control the terms of the contract; instead, the conflicting terms are 'knocked out' and the contract is governed by UCC § 2-207(3). The court explicitly overrules its prior precedent in Roto-Lith, which applied the common law 'last shot rule' where the last form sent controls. The court found Roto-Lith inconsistent with the purpose of UCC § 2-207, which is to displace the common law's rigid 'mirror image' rule. Citing Official Comment 6, the court reasons that when forms have conflicting terms, each party is assumed to have objected to the other's clause. Because the parties' conduct—shipping and accepting the goods—recognized the existence of a contract, § 2-207(3) applies. The contract's terms are those on which the forms agree, supplemented by the UCC's default 'gap-filler' provisions. This approach prevents the seller who sends the last form from unilaterally rewriting the contract.

Yes, a contract is formed under UCC § 2-207 even when both parties' forms contain conflicting terms, because subsection (3) governs in such situations, not the language after the comma in subsection (1). The court overrules its previous decision in Roto-Lith, Ltd. v. F.P. Bartlett & Co., finding that when the terms in two forms are contradictory, each party is assumed to object to the other party's conflicting clause. Such conflicting terms do not become part of the contract. Instead, under subsection (3), the contract consists of the terms agreed upon by both parties, together with supplementary terms incorporated under any other UCC provisions. 

The court reasons that allowing the seller's terms to govern simply because the buyer accepts the goods, as Roto-Lith held, would undermine the purpose of § 2-207. It would essentially allow the party sending the last form to dictate the terms of the contract, contradicting the other party's form. This contradicts the intent of § 2-207 to reject the common law 'mirror rule' that an acceptance must precisely match the offer. 

The court concludes that § 2-207(3) should apply in this case because Elmwood's acknowledgment was expressly conditional on Ionics' assent to the additional terms, the conflicting limitation of liability term did not become part of the contract under subsection (2), and the parties' conduct established a contract. Therefore, the contract consists of the terms the parties agreed on and the UCC's supplementary terms.

Ionics, Inc. v. Elmwood Sensors, Inc.

Case Podcast

Rule of Law:

The Legal Principle

Facts:

Procedural Posture:

How It Got Here

Issue:

Legal Question at Stake

Opinions:

Majority, Concurrences & Dissents

Analysis:

Why This Case Matters

Gunnerbot