Also known as: expressly conditional on assent · conditional acceptance · counteroffer
Written by attorneys — see sources below.
A proviso attached to a response to an offer that requires the offeror's agreement to any additional or different terms before the response can serve as an acceptance. The proviso prevents the response from operating as an acceptance even if the response is otherwise definite and seasonable.
Metro Ed sent First Academy a purchase order accepting a quoted price for textbooks but adding a buyback term for unsold copies. The order stated that acceptance was limited to its own terms. First Academy shipped the books without agreeing to the buyback term. The conditional language prevented the purchase order from operating as an acceptance, so the buyback term never entered the contract formed by the parties' conduct.
Step-Saver ordered software from Wyse Technology. Wyse sent an acknowledgment that added a warranty disclaimer and stated the acknowledgment was conditional on assent to the new term. Step-Saver installed the software without expressly agreeing to the disclaimer. The conditional language kept the acknowledgment from operating as an acceptance, leaving the disclaimer outside the contract formed by the parties' conduct.
In 1981, Step-Saver Data Systems, Inc. began operating as a value added retailer for International Business Machines products, combining hardware and software to meet the needs of physicians' and lawyers' offices. By the mid-1980s, Step-Saver developed a multi-user computer system using an IBM AT as the main computer, WY-60 terminals manufactured by Wyse Technology, and Multilink Advanced as the operating system produced by The Software Link, Inc. Step-Saver began marketing this system in November 1986 after testing the software and receiving assurances from TSL sales representatives about compatibility with off-the-shelf MS-DOS programs. Almost immediately upon installation of the system, Step-Saver began to receive complaints from some of its customers. Step-Saver, in addition to conducting its own investigation of the problems, referred these complaints to Wyse and TSL, and requested technical assistance in resolving the problems. After several preliminary attempts to address the problems, the three companies were unable to reach a satisfactory solution, and disputes developed among the three concerning responsibility for the problems. At least twelve of Step-Saver's customers filed suit against Step-Saver because of the problems with the multi-user system. Step-Saver first filed a declaratory judgment action seeking indemnity, which the district court dismissed as not ripe, a ruling affirmed on appeal. Step-Saver then filed a second complaint alleging breach of warranties by both defendants and intentional misrepresentations by TSL. On the first day of trial, the district court ruled that the box-top license constituted the complete agreement and excluded evidence of prior warranties. It granted a directed verdict for TSL on the misrepresentation claim and on the warranty claims after additional briefing. The case proceeded against Wyse, where the jury found for Wyse on express warranty and fitness for particular purpose, and the court refused to instruct on merchantability. Step-Saver appealed four issues to the Third Circuit, including the effect of the box-top license and sufficiency of evidence on the other claims.
View caseLanguage that clearly states the response will not operate as an acceptance unless the offeror agrees to the added terms prevents formation under the acceptance rule. Courts examine whether the offeree used words such as "limited to" or "conditional on" the new terms. Vague requests for changes do not meet the threshold.
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The response does not operate as an acceptance, so no contract forms on the offer plus additional terms. The parties may still create a contract through their subsequent conduct recognizing the existence of an agreement. Only terms on which the writings agree plus gap fillers enter that contract.
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Silence alone does not supply the required assent to the additional or different terms. The offeror must take affirmative action showing agreement to the condition before the response can function as an acceptance. Conduct recognizing a contract may still bind the parties under the conduct rule instead.
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The condition blocks the response from becoming an acceptance in the first place, so the merchant rule for adding nonmaterial terms never applies. The analysis shifts to whether the parties' later conduct formed a contract and what terms that conduct incorporates.
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