947 F.2d 1333 (1991)
In 1980, Union Carbide Corporation sold plastic sausage casings to Oscar Mayer Foods Corporation.1 The prices in Union Carbide’s invoices to Oscar Mayer included two 1 percent sales taxes applicable to sales originating in Chicago.2 After another supplier began charging a 1 percent lower price by accepting orders at an office outside Chicago and avoiding one of the taxes, Union Carbide instructed its customers to send orders to an address outside Chicago, stopped paying both taxes, and reduced its price by 2 percent.3
Eight years later, in 1988, Illinois tax authorities assessed Union Carbide $88,000 in back taxes on sales to Oscar Mayer plus $55,000 in interest.4 Union Carbide paid the assessment and filed suit against Oscar Mayer to recover the amounts, relying on a provision printed on the back of its invoices and also contained in a price book sent to customers.5
The provision stated that in addition to the purchase price, the buyer shall pay the seller the amount of all governmental taxes that the seller may be required to pay with respect to the production, sale or transportation of any materials delivered.6 Oscar Mayer sent large purchase orders to Union Carbide that were not filled immediately but filed for future reference; when Oscar Mayer needed casings it would phone Union Carbide, which shipped the next day, after which Oscar Mayer sent a release order on the same form used for the standing orders.7
At about the same time that Oscar Mayer sent a release order, Union Carbide sent an invoice for the shipment, with the tax provision appearing on the back of each invoice and in the price book.8 The case was brought as a diversity suit for breach of contract and was resolved in Oscar Mayer’s favor on summary judgment in the district court, after which Union Carbide appealed.9
Whether the tax provision printed on Union Carbide's invoices and price book obligated Oscar Mayer to reimburse Union Carbide for back sales taxes and interest assessed by Illinois authorities eight years after the sales?10
Contract language is interpreted according to its economically plausible meaning rather than a semantically possible but implausible one.11 Contracts and contract law normally seek to impose liability for a mistake on the party to the contract who is in the better position to prevent the mistake.12 The party may reduce its disutility by means of market insurance or self-insurance.
No. The provision states that the buyer shall pay the seller the amount of all governmental taxes that the seller may be required to pay with respect to the production, sale or transportation of any materials delivered. This language is read as permitting the seller to add on to the agreed purchase price the amount of whatever sales tax is applicable to the purchase at the time of sale.13 It does not impose on the buyer an open-ended liability to pay back taxes and interest many years after taking delivery because the seller blundered in computing its tax liability.14
Union Carbide was the taxpayer that dealt directly with the Illinois authorities and was in the superior position to determine the correct tax treatment when it changed its order address in 1980.15 Oscar Mayer had no involvement with the tax assessment.16 The background of matching a competitor's unconditional one-percent price reduction makes an open-ended indemnity for back taxes implausible.17 Oscar Mayer would have had to establish reserves against a contingent liability that the competitor did not impose.18
The tax provision did not obligate Oscar Mayer to reimburse Union Carbide for the back taxes and interest.19
Whether the tax provision in Union Carbide's invoices and price book effected a material alteration of the parties' contract under UCC § 2-207?20
Under UCC § 2-207, additional terms in an acceptance between merchants become part of the contract unless the term makes a material alteration, in the sense that consent to it cannot be presumed because it would cause unreasonable surprise.21 If the new term does effect a material alteration, the party who proposed it must present additional evidence, beyond the term itself, to show that consent can be inferred from the other party's failure to object.22
Yes. Oscar Mayer's purchase orders and release orders contemplated that sales tax shown on an invoice would be added to the purchase price, and Oscar Mayer paid such taxes without complaint.23 Construed as an indemnity for back taxes assessed eight years later, however, the provision on the invoices and price book worked a material alteration.24 It created an open-ended and incalculable liability rather than a current tax shown on an invoice that Oscar Mayer could pay and then decide whether to continue buying from Union Carbide.25
No evidence of prior dealings or course of performance showed that Oscar Mayer had consented to such a term. The sequential exchange of standing orders, price books, release orders, and invoices did not supply the additional evidence of consent required when a term effects a material alteration.26
The tax provision effected a material alteration of the parties' contract under UCC § 2-207 and was therefore unenforceable against Oscar Mayer.27