Contract Law: The Battle of the Forms

December 22, 2014

Please note, this is the second article in my five-piece series on contract law. To view the first post, please click here.

In a commercial transaction, a variety of documents may be exchanged: Request for Quotation, Offer, Quotation, Proposal, Acceptance, Acknowledgement, Purchase Order, Confirmation, and others. Some – or all – of these documents may include Standard Terms & Conditions displayed prominently on the front, silkscreened unobtrusively on the back, or referenced on a web page whose URL is listed on the documents.

Often the Buyer’s T&Cs differ significantly from those of the Seller. This results in what is called “the battle of the forms.” Which terms will constitute the agreement? The cases are replete with battle language like “first shot,” “last shot,” and “knock out,” where conflicting terms cancel, creating “gaps” or missing terms.

If the Court finds the parties intended to make a contract, and if the parties did not agree on all of the material terms, the UCC provides “gap fillers.” These are the default terms the Court will read into a contract to fill in the missing terms with what the Code drafters considered to be commercially reasonable provisions. Examples of gap-fillers are: “Unless otherwise agreed:”

402.307: All goods called for by a contract for sale must be tendered in a single delivery.

402.308: The place for delivery of goods is the seller’s place of business.

402.309: The time for shipment or delivery or any other action under a contract shall be a reasonable time.

402.310: Payment is due at the time and place at which the buyer is to receive the goods.

402.314: A warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind.

402.315: Where the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller’s skill or judgment to select or furnish suitable goods, there is an implied warranty that the goods shall be fit for such purpose.

Code gap-fillers are widely understood to be pro-Purchaser. For example, if the Offer (a Purchase Order) requires the Seller to warrant that the equipment will be of the highest quality, and the Acceptance says the equipment is offered “as-is,” the terms cancel. The gap-filler (314) requires the Seller to deliver equipment that is merchantable. The implied warranty is something less than “highest quality,” yet much more than “as-is.” How the courts deal with these issues will be addressed in my third section of this series of articles.

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