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Luedtke Engineering Co., Inc. v. Indiana Limestone Co., Inc.

Court of Appeals for the Seventh Circuit
740 F.2d 598, 1984 U.S. App. LEXIS 19661, 39 U.C.C. Rep. Serv. (West) 400 (1984)
ELI5:

Sections

Rule of Law:

Under the Uniform Commercial Code (UCC), an additional term in an acceptance between merchants does not become part of the contract if it materially alters the agreement. Whether a term constitutes a material alteration is a question of fact to be determined by the trial court based on whether the term would result in surprise or hardship to the non-assenting party.


Facts:

  • The Army Corps of Engineers solicited bids for a harbor repair project with a schedule anticipating completion by November 1979.
  • Indiana Limestone sent Luedtke a price quote for 70,000 tons of stone, explicitly noting that the price applied to shipments made during both 1978 and 1979.
  • Luedtke won the Corps contract and, after failing to secure a cheaper source, accepted Indiana Limestone's offer via a purchase order.
  • Luedtke's purchase order added a specific delivery term requiring shipment at 1,500 tons per day starting July 24, 1978, intending to finish the project a year early (by November 1978).
  • Indiana Limestone did not ship at the requested 1,500 tons per day rate due to rail service issues, labor strikes, and weather.
  • Luedtke received the final shipment in August 1979, which was later than their internal goal but still allowed them to finish the project before the Corps' November 1979 deadline.
  • Luedtke claimed damages for the delays, arguing the specific delivery rate in their purchase order was a binding contract term.

Procedural Posture:

  • Luedtke Engineering filed a diversity action suit against Indiana Limestone in the United States District Court alleging breach of contract.
  • The District Court held a trial to determine if the delivery term was binding.
  • The District Court ruled in favor of Indiana Limestone, finding the delivery term was a material alteration and that the defendant had performed within a reasonable time.
  • Luedtke appealed the District Court's decision to the United States Court of Appeals for the Seventh Circuit.

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Issue:

Is the determination of whether an additional contractual term constitutes a 'material alteration' under UCC § 2-207 a question of fact or law, and did the buyer's specific delivery schedule materially alter the contract?


Opinions:

Majority - Bauer

Yes, the determination is a question of fact, and the delivery term was a material alteration. The Court affirmed the lower court's ruling, establishing that under Indiana's version of the UCC, the materiality of an alteration depends on the factual expectations of the parties. The Court reasoned that enforcing Luedtke's strict delivery schedule would cause 'surprise and hardship' to Indiana Limestone because the seller knew the Corps' deadline was 1979, not 1978, and had no knowledge of Luedtke's intent to finish early. Additionally, the parties' course of dealing and trade usage suggested that a rate of 1,500 tons per day was an aspirational goal rather than a binding requirement. Since the term was a material alteration, it did not become part of the contract, and Indiana Limestone's delivery within a reasonable time satisfied their obligations.



Analysis:

This case is significant for clarifying the standard of review in 'battle of the forms' disputes under UCC § 2-207. By defining 'material alteration' as a question of fact rather than law, the Seventh Circuit limits the ability of appellate courts to overturn trial court findings on contract formation disputes unless they are clearly erroneous. The decision emphasizes that the 'surprise or hardship' test requires a deep look into the specific circumstances, prior dealings, and actual knowledge of the parties, rather than just the text of the documents. It reinforces the principle that unilateral insertion of strict performance terms (like delivery schedules) will often fail if they deviate significantly from industry norms or the counter-party's reasonable expectations.

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