January 6, 2013 Leave a comment
CITATION(S):  EWCA Civ 9,  1 WLR 401, 1979 UK 1 All ER 965
FACTS: The sellers of a machine (Butler Machine Tool Co. Ltd.) made an offer (on 23rd May) to the buyers (Ex-Cell-O Corporation) for selling a machine worth a fixed price, subject to certain terms and conditions (T&C), amongst which two prominent ones were:
- Those T&C shall prevail over any terms and conditions in the buyers’ order
- There was a price variation clause which provided for an increase in the price of the machine if there was an increase in costs and so forth.
The buyers in return made an order for the machine, subject to certain T&C including express denial of any Price Variation provision (as different from T&C laid out in sellers’ quotation). However, they signed the acknowledgement form stating, “…We accept your order on the terms and conditions stated therein…”. The receipt of this order was duly acknowledged by the sellers without any objection to any clause of its T&C but with words, “…in accordance with our revised quotation of 23rd May…”. When the sellers came to deliver the machine they claimed the increased price of the machine because of raised costs. However, buyers refused to pay the increase in price. The sellers sued them for the breach of contract.
LOWER COURT: The contract was concluded on the sellers’ rather than the buyers’ terms and conditions and was therefore the contract subject to price variation.
To this buyers appealed.
- Apart from the T&C which were printed on back of the quotation, sellers also contended that the acknowledgement slip of the buyers’ order was accompanied by the letter which stated that the order was accepted in accordance with sellers’ revised quotation of 23rd May, and, hence, the contract was on the sellers’ terms.
- It was even contended by the sellers that the letter enclosed with the acknowledgement receipt was in itself a counter offer which was accepted by the buyers by taking the physical delivery of the goods and hence the contract was made according to former’s terms and conditions.
1) As per Denning M.R., “when there is a ‘battle of the forms’, then there is a contract as soon as the last of the forms is sent and received without objection being taken to it” (LAST SHOT DOCTRINE). Here, the ‘last shot’ was fired by the buyers by attaching T&C to their order which were materially different from those of sellers. Since, that order was received and acknowledged without any objection to any of the T&C attached therewith, hence, buyers’ terms will prevail.
2) Further, according to him, the documents comprised in ‘battle of forms’ were to be considered as a whole. Therefore, the acknowledgement made by the sellers was a decisive document which makes it clear that the contract was on the buyers’ terms and not on the sellers’ terms.
3) Other judges though arrived at the same conclusion but followed the traditional pathway. They observed that the buyers’ order was a counter offer which destroyed the offer made in the sellers’ quotation. This was because the T&C mentioned in the order were poles apart from the T&C mentioned in the quotation. The sellers by acknowledging the receipt of the order, and, delivering the machine, accepted that offer. They, therefore, couldn’t claim the increase in price as the price variation clause of the original offer, made by them, stood cancelled.
4) (As per Lawton L.J.) If the letter was taken to be a counter offer made by the sellers to the buyers, then, there was never a consensus ad idem, and, hence, there was never a valid offer, as the buyers had made it clear to the sellers, even before taking the delivery, that, they were not accepting the price variation clause.
5) The court held that the letter enclosed with the acknowledgement slip, was in the business sense, referring to the quotation as to the price and the identity of the machine and not the small print conditions on the back of the quotation. Hence, it didn’t incorporate sellers’ terms back into the contract.
CONCLUSION: The court therefore allowed the appeal and case was decided in favour of the buyers.
RATIO: A reply to an offer which purports to be an acceptance but which contains terms materially different from those originally set out in offer, shall amount to counter offer, which when duly acknowledged and accepted by the offeror shall amount to acceptance of the counter offer, and, shall bind him with the terms set out in the counter offer.
Author: Vishrut Kansal (National University of Juridical Sciences, Kolkata)
Editor: Vivek Kumar Verma (National University of Juridical Sciences, Kolkata)