Terms stated in an acceptance or confirmation that vary from those in the offer. Under the UCC a definite and seasonable expression of acceptance operates as an acceptance even though it states terms additional to or different from those offered unless acceptance is expressly made conditional on assent to the additional or different terms.
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Buyer Accepts With Altered Payment Terms
Drake Logistics sends Duarte Shipping a purchase order for steel coils at $800 per ton with payment due in 30 days. Duarte replies with an acknowledgment accepting the order but stating payment is due in 45 days. The acknowledgment forms a contract because it is a definite expression of acceptance sent within a reasonable time. The payment term is treated as a proposal for addition to the contract.
Parties Dispute Meaning of Written Terms
Pacific Gas hires Thomas Drayage to remove and replace a turbine cover under a written contract requiring the contractor to indemnify the owner for property damage. After the cover falls and damages equipment, the parties disagree whether the indemnity clause covers damage to the owner's own property. The court admits extrinsic evidence showing the parties attached different meanings to the clause before deciding whether the writing is ambiguous.
Pacific Gas & Electric Co. v. G.W. Thomas Drayage & Rigging Co.69 Cal. 2d 33, 69 Cal. Rptr. 561, 564, 566, 567-68, 442 P.2d 641, 644, 645-46 (1968)
In 1960, defendant G.W. Thomas Drayage & Rigging Co. entered into a contract with plaintiff Pacific Gas & Electric Co. to furnish the labor and equipment necessary to remove and replace the upper metal cover of plaintiff's steam turbine.
Under the contract defendant agreed to perform the work at its own risk and expense and to indemnify plaintiff against all loss, damage, expense and liability resulting from injury to property arising out of or connected with performance of the contract. Defendant also agreed to procure at least $50,000 in insurance covering liability for injury to property, with plaintiff named as an additional insured under a policy containing a cross-liability clause.
During performance of the work the cover fell and injured the exposed rotor of the turbine. Plaintiff spent $25,144.51 on repairs and brought suit to recover that amount under the indemnity clause. At trial plaintiff dismissed its negligence count and obtained judgment on the theory that the indemnity provision covered injury to plaintiff's own property.
Defendant offered to prove through admissions of plaintiff's agents, defendant's conduct under similar contracts with plaintiff, and other evidence that the parties intended the indemnity clause to cover only injury to third-party property. The trial court refused to admit any extrinsic evidence, held that the plain language of the agreement required indemnification for injury to plaintiff's property, and entered judgment for plaintiff.
To prove the amount of damages sustained, plaintiff presented invoices received from Ingersoll-Rand, the manufacturer and repairer of the turbine, the drafts by which plaintiff had remitted payment, and testimony that payment had been made. Plaintiff called a mechanical engineer who qualified as an expert witness on the repair of turbines.
Does an acceptance containing different terms still form a contract under the UCC?
Yes. A definite and seasonable expression of acceptance operates as an acceptance even though it states terms additional to or different from those offered unless acceptance is expressly made conditional on assent to the additional or different terms.
Supporting sources
When are different terms in an acceptance treated as proposals rather than part of the contract?
The additional or different terms are construed as proposals for addition to the contract. Between merchants they become part of the contract unless the offer expressly limits acceptance to its terms, they materially alter the contract, or notification of objection has already been given.
Supporting sources
How does a court determine whether parties intended different terms in a writing?
Rational interpretation requires preliminary consideration of all credible extrinsic evidence offered to prove the intention of the parties. The fact that terms appear clear to a judge does not preclude the possibility that the parties chose language to express different terms.
Supporting sources
939 F.2d 91 (3d Cir. 1991)
…or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms. (2) The additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless: (a) the offer expressly limits…