Packgen v. Berry Plastics Corp.
973 F. Supp. 2d 48, 2013 WL 5348071, 81 U.C.C. Rep. Serv. 2d (West) 803 (2013)
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Rule of Law:
Under UCC § 2-207(2)(b), an additional term in a written confirmation that shortens the statute of limitations to one year may materially alter the contract if it results in unreasonable surprise or hardship to the buyer, even if a state statute otherwise permits such a reduction by original agreement. Whether such a term causes unreasonable surprise is a question of fact that considers factors like prior dealings, industry custom, and the conspicuousness of the term.
Facts:
- Packgen manufactures bulk containers and required woven polypropylene fabric for its products.
- On September 25, 2007, and November 26, 2007, Packgen sent purchase orders to Berry for two different sizes of laminated polypropylene fabric.
- Berry accepted the orders by beginning performance and communicating production and shipping updates to Packgen via email throughout November and December 2007.
- Berry shipped the first order on December 22, 2007, and Packgen received it on December 27. The next day, Berry mailed an invoice with its standard terms and conditions attached, which included a one-year statute of limitations.
- In at least seven prior transactions between the parties, Berry's invoices had never included any terms and conditions.
- Berry shipped the second order on January 18, 2008, and Packgen received it on January 21. That same day, Berry mailed a second invoice, which also included the same standard terms and conditions.
- The one-year limitation clause was located in the eighth sentence of a paragraph on the back side of a page stapled to the invoices.
- On February 11, 2008, Packgen notified Berry of alleged defects in the fabric, stating it was unaware of the shortened limitations period until after the dispute arose and had never expressly agreed to it.
Procedural Posture:
- Packgen filed a five-count complaint against Berry Corporation and Covalence Specialty Coatings, LLC (Berry) in the U.S. District Court for the District of Maine, a federal trial court.
- Berry filed a motion for summary judgment, arguing that all of Packgen's claims were barred by the one-year statute of limitations included in its standard terms and conditions.
- Packgen filed a memorandum opposing the motion for summary judgment.
- Berry filed a reply to Packgen's opposition.
- The court held oral argument on the motion for summary judgment.
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Issue:
Does an additional term in a seller's invoice, sent after shipment of goods, that reduces the statute of limitations from the statutory four years to one year, constitute a material alteration of the contract under Maine's version of UCC § 2-207(2)(b), thereby preventing it from becoming part of the contract?
Opinions:
Majority - Woodcock, Jr., J.
Yes, an additional term reducing the statute of limitations to one year can constitute a material alteration of the contract. The parties formed their contracts when Berry shipped the goods, which constituted acceptance of Packgen's purchase orders under UCC § 2-206. The invoices sent by Berry after shipment served as written confirmations containing proposals for additional terms, which are analyzed under UCC § 2-207(2). Under § 2-207(2)(b), an additional term between merchants does not become part of the contract if it materially alters it. The test for material alteration in Maine is whether the term would result in 'unreasonable surprise or hardship.' While Maine's version of UCC § 2-725 allows parties to agree to a one-year limitations period, this does not make such a term 'per se' reasonable and immune from the material alteration analysis. A term may be statutorily permissible but still cause unreasonable surprise. Here, a genuine dispute of material fact exists as to unreasonable surprise because the term was inconspicuous, and Berry had never included terms and conditions in its numerous prior dealings with Packgen. Therefore, Berry's motion for summary judgment is denied.
Analysis:
This case clarifies that the inclusion of a statutorily permissible term, such as a shortened statute of limitations under UCC § 2-725, is not automatically incorporated into a contract under UCC § 2-207(2). The decision rejects a 'per se' reasonableness approach, instead mandating a fact-specific inquiry into whether the term causes unreasonable surprise or hardship. This precedent strengthens the position of parties who receive post-agreement confirmations with new, burdensome terms, particularly where there is a history of prior dealings without such terms. For legal practitioners, it underscores the importance of conspicuousness and prior course of dealing in determining the enforceability of boilerplate terms added in the 'battle of the forms'.
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