Roto-Lith, Ltd. v. F. P. Bartlett & Co., Inc.
1 U.C.C. Rep. Serv. (West) 73, 1962 U.S. App. LEXIS 6193, 297 F.2d 497 (1962)
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Rule of Law:
Under UCC § 2-207, a seller's response to an offer that states a condition materially altering the contractual obligation solely to the buyer's disadvantage is not an acceptance with a proposal for additional terms, but is instead a counteroffer. The buyer accepts this counteroffer by accepting the goods with knowledge of the new conditions.
Facts:
- Roto-Lith, Ltd. manufactured cellophane bags and required an adhesive emulsion.
- On October 23, 1959, Roto-Lith mailed a written purchase order to a Massachusetts-based emulsion manufacturer for a drum of emulsion, specifying the end use was for 'wet pack spinach bags'.
- On October 26, the manufacturer prepared and mailed an acknowledgment form and an invoice.
- The acknowledgment form contained conspicuous language on its face stating, 'All goods sold without warranties, express or implied, and subject to the terms on reverse side.'
- The reverse side of the form stated that the buyer assumes all risk for the use of the goods and that if the terms were not acceptable, the 'Buyer must so notify Seller at once.'
- The goods were shipped on October 27, and Roto-Lith received the acknowledgment no later than it received the goods.
- Roto-Lith did not object to the terms in the acknowledgment, paid for the emulsion, and used it.
- Subsequently, the bags produced with the emulsion failed to adhere.
Procedural Posture:
- Roto-Lith, Ltd. (plaintiff) filed a lawsuit against the emulsion manufacturer (defendant) in the United States District Court for the District of Massachusetts for breach of warranty.
- The case proceeded to trial.
- At the conclusion of the evidence, the trial court judge directed a verdict in favor of the defendant.
- Roto-Lith, Ltd. (appellant) appealed the trial court's judgment to the United States Court of Appeals for the First Circuit.
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Issue:
Under UCC § 2-207, does a seller's responsive document containing a conspicuous warranty disclaimer, which materially alters the agreement to the buyer's detriment, operate as an acceptance of the buyer's offer, with the disclaimer being a mere proposal for addition to the contract?
Opinions:
Majority - Aldrich, J.
No. A response which states a condition materially altering the obligation solely to the disadvantage of the offeror is an acceptance expressly conditional on assent to the additional terms, effectively creating a counteroffer. The court reasoned that UCC § 2-207 was intended to change the common law 'mirror image' rule, but not to the extent that it would create an absurd result where an offeree is bound to the offeror's terms while its own materially different terms are treated as a mere proposal that the offeror will obviously never accept. To give the statute a practical construction, a response containing a term that is unilaterally burdensome on the offeror must be treated as a counteroffer. Roto-Lith accepted this counteroffer, including the warranty disclaimer, when it accepted and used the goods with knowledge of the terms in the acknowledgment.
Analysis:
This decision represents a significant, and widely criticized, judicial interpretation of UCC § 2-207. Instead of treating the seller's new term as a proposal under § 2-207(2), the court effectively revived the common law's 'last shot rule,' where the party who sends the last form dictates the terms of the contract. This holding creates a special exception for terms that are solely disadvantageous to the original offeror, treating them as counteroffers accepted by performance. Subsequent cases and scholarly commentary have largely rejected this approach, favoring the 'knockout rule' or other interpretations that better align with the UCC's goal of moving away from common law formalities in the 'battle of the forms'.
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