Nordyne, Inc. v. International Controls & Measurements Corp.
262 F.3d 843 (2001)
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Rule of Law:
A price quotation constitutes a binding offer if it is sufficiently detailed and results from prior negotiations, and the terms of that offer can incorporate a forum-selection clause through express reference and a long-standing course of dealing between the parties.
Facts:
- For approximately ten years, Nordyne, Inc. purchased control boards from International Controls & Measurements Corporation (ICM).
- During this period, every ICM shipment was accompanied by an invoice stating that the sale was subject to terms on the reverse side, which included a one-year warranty and a forum-selection clause requiring any legal action to be brought in Onondaga, New York.
- On several occasions over the years, Nordyne had taken advantage of the one-year warranty provided in ICM's terms.
- In 1997, after negotiations for a new, custom-designed control panel, ICM sent Nordyne a detailed price quotation for an estimated annual usage of 40,000 units.
- The quotation included price, packaging, and shipping terms, and stated it was subject to the 'Seller’s standard terms and conditions contained on the order acknowledgment.'
- ICM sent manufactured samples to Nordyne, and on September 15, 1997, Nordyne signed a production approval form for the samples.
- Two days later, Nordyne issued its own purchase order form, which contained its own terms and conditions on the reverse side and did not include a forum-selection clause.
- ICM signed Nordyne's acknowledgment form without noting exceptions and began shipping the new control panels, including its standard invoice with each shipment. Nordyne later experienced problems with the panels.
Procedural Posture:
- Nordyne, Inc. filed a breach-of-warranty action against International Controls & Measurements Corporation (ICM) in the United States District Court for the Eastern District of Missouri.
- ICM filed a motion to dismiss the complaint for improper venue, based on the forum-selection clause contained in its customer service invoices.
- The District Court granted ICM's motion to dismiss.
- Nordyne, as the appellant, appealed the District Court’s decision to the United States Court of Appeals for the Eighth Circuit, with ICM as the appellee.
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Issue:
Does a forum-selection clause, located on the reverse side of a seller's invoice and referenced in its price quotation, become an enforceable part of the contract when the buyer accepts the seller's detailed quotation, particularly where the parties have a ten-year course of dealing under those same terms?
Opinions:
Majority - Judge Richard S. Arnold
Yes. The forum-selection clause is an enforceable part of the contract because the contract was formed when Nordyne accepted ICM's detailed price quotation, which incorporated ICM's standard terms. Under Missouri law, a price quotation can be an offer if it is detailed enough to justify the recipient in believing that their assent is all that is needed to form a contract. Here, the quotation resulted from extensive prior negotiations, was sent only to Nordyne, and was highly detailed as to price, quantity, and shipping terms for a custom-designed product. Nordyne's signed production approval on September 15th constituted the acceptance of this offer. The quotation's reference to the 'Seller's standard terms and conditions' incorporated the terms on ICM's invoice, which included the forum-selection clause. This conclusion is further supported by the parties' decade-long course of dealing, during which Nordyne consistently received and operated under these terms, even availing itself of the warranty provision contained therein.
Analysis:
This decision clarifies the distinction between a preliminary price quotation and a formal offer under the UCC. It establishes that courts will look at the entirety of the circumstances, including the level of detail, prior negotiations, and the specificity of the recipient, to determine if a quote constitutes an offer. The case also significantly reinforces the power of a 'course of dealing' to incorporate terms into an agreement, even if those terms are on a document, like an invoice, that is delivered after the contract is technically formed. This holding indicates that in a battle-of-the-forms scenario between parties with an established relationship, the historical terms of their dealings may override conflicting terms on a subsequent purchase order.
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