Leonard Pevar Co. v. Evans Products Co.
524 F.Supp. 546, 1981 U.S. Dist. LEXIS 15078, 32 U.C.C. Rep. Serv. (West) 720 (1981)
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Rule of Law:
Under UCC § 2-207, a contract may be formed through an oral agreement confirmed in writing, an exchange of non-identical written forms, or by the conduct of the parties. Additional, material terms in a seller's acknowledgment form, such as warranty disclaimers, do not become part of the contract unless expressly assented to by the buyer; if a contract is formed only by conduct, its terms consist of those on which the writings agree, supplemented by UCC gap-filler provisions.
Facts:
- In the fall of 1977, Leonard Pevar Company ('Pevar') sought price quotations for medium density overlay plywood for a construction project.
- Pevar's contract administrator, Marc Pevar, contacted Kenneth Kruger of Evans Products Company ('Evans'), who quoted the lowest price.
- On October 14, 1977, Pevar alleges it placed a telephone order with Evans for the plywood, forming an oral contract.
- Following the phone call, Pevar sent Evans a written purchase order confirming the order, specifying price, quantity, and shipping instructions, but making no mention of warranties or remedies.
- On October 19, 1977, Evans sent Pevar a written sales acknowledgment.
- The reverse side of Evans's acknowledgment contained boilerplate terms, including a disclaimer of implied warranties and a limitation on buyer's remedies for defective goods.
- Evans's acknowledgment form also stated that the contract of sale was expressly conditional on Pevar's assent to all the terms contained in the document.
Procedural Posture:
- The Leonard Pevar Company ('Pevar') filed a diversity action against the Evans Products Company ('Evans') in the United States District Court.
- Pevar's complaint alleged breach of express and implied warranties related to Evans's sale of plywood.
- Evans answered, denying liability on the grounds that it had expressly disclaimed all warranties and limited its liability in its contract with Pevar.
- Both Pevar and Evans filed cross motions for summary judgment.
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Issue:
Under UCC § 2-207, do additional terms in a seller's written acknowledgment that materially alter the agreement, such as warranty disclaimers and liability limitations, become part of a contract for the sale of goods when they are included in a form sent after an alleged oral agreement or in response to a buyer's purchase order?
Opinions:
Majority - Latchum, Chief Judge
No, additional, material terms in a seller's acknowledgment form do not become part of the contract under UCC § 2-207 without the buyer's express assent. The court analyzes three possible scenarios for contract formation. First, if an oral agreement was reached, Evans's acknowledgment is a confirmation with additional terms. Under § 2-207(2), such terms are proposals that do not become part of the contract if they 'materially alter' it, which warranty disclaimers and liability limitations generally do. Second, if no oral agreement existed, Pevar's purchase order is the offer. Evans's acknowledgment, containing an 'expressly conditional' clause, is a counteroffer, not an acceptance under § 2-207(1). The court rejects the Roto-Lith holding and finds that the buyer's acceptance of the goods does not constitute assent to the counteroffer's terms. Third, if the writings do not form a contract but the parties' conduct recognizes one (e.g., shipping and accepting goods), a contract is established under § 2-207(3). The terms of that contract consist of the terms on which the writings agree, with conflicting or additional terms 'knocked out' and replaced by UCC default provisions ('gap-fillers'), which typically include implied warranties.
Analysis:
This opinion provides a clear roadmap for resolving 'battle of the forms' disputes under UCC § 2-207, cementing the modern judicial approach. The court's explicit rejection of the controversial Roto-Lith decision is significant, as it repudiates the common law's 'last shot rule' where the party sending the last form dictates the terms. By endorsing an analysis that prevents the unilateral imposition of material terms through boilerplate, the decision reinforces the UCC's goal of giving effect to the parties' true bargain. This case establishes that where writings conflict but conduct shows a deal, the 'knock-out' rule of § 2-207(3) applies, defaulting to the UCC's gap-filler provisions, which often favor the buyer by including implied warranties.
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