Also known as:supplementary term · supplemental terms · supplemental term · supplemental provisions
Written by attorneys — see sources below.
Gap-filler provisions supplied by the Uniform Commercial Code that complete a contract formed by the parties' conduct when their writings do not agree on all terms. These provisions include implied warranties of merchantability and fitness, damages rules such as seller liability for consequential damages, and other default rules like those governing delivery and risk of loss. Disputed terms appearing in only one writing are excluded and cannot be restored as supplementary terms.
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How its tested
Common Examples
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Conflicting Forms on Damages Waiver
Sapphire Holdings emailed a bid to supply steel beams to Solstice Ventures at a fixed price and delivery schedule. Solstice responded with a purchase order that added a broad waiver of consequential damages. Both parties proceeded with fabrication, delivery, and acceptance of the beams despite the mismatch. The contract therefore included only the matching terms on price and quantity plus UCC gap-filler provisions that permit recovery of foreseeable consequential damages.
Arbitration Clause in Battle of Forms
C. Itoh sent a purchase order to Jordan International that omitted any arbitration provision. Jordan replied with its own form containing an arbitration clause. The parties performed the sale of goods without resolving the difference. Because the writings did not agree on arbitration, the clause was excluded and the contract was completed only by the agreed terms together with UCC supplementary provisions on remedies and warranties.
C. Itoh & Co. (America) Inc. v. Jordan Int’l Co.552 F.2d 1228 (7th Cir. 1977)
In August 1974, C. Itoh & Co. (America) Inc. submitted a purchase order to Jordan International Company for a quantity of steel coils. Jordan responded with an acknowledgment form that included a statement on its face making acceptance expressly conditional on the buyer's assent to additional terms on the reverse side, one of which was a broad arbitration provision. Itoh did not expressly assent or object to the arbitration term.
Itoh had separately contracted to sell the steel coils to Riverview Steel Corporation, Inc., under an agreement that provided for arbitration of controversies except those relating to quality. After Jordan delivered the steel and Itoh paid for it, Riverview informed Itoh that the coils were defective and did not conform to the contract standards, and refused to pay Itoh.
Itoh then filed suit against both Riverview and Jordan in federal district court. Itoh claimed that Riverview wrongfully refused payment and that Jordan had sold defective steel with late delivery. Riverview raised defenses including that the steel was defective and delivery was late.
Jordan moved for a stay of the proceedings pending arbitration pursuant to Section 3 of the Federal Arbitration Act. The district court denied the motion, concluding that because the quality issues between Itoh and Riverview were not subject to arbitration under their contract, the entire litigation should proceed in court to allow resolution in a single forum. Jordan appealed the denial to the Seventh Circuit.
What provisions count as supplementary terms under UCC § 2-207(3)?
Supplementary terms include the Code's implied warranties of merchantability and fitness, its damages provisions such as seller liability for consequential damages, and standard gap-filler rules on delivery and risk of loss. They do not include any additional or different term that appears in only one party's writing.
Can an arbitration clause become a supplementary term when the writings conflict?
No. Arbitration is not a supplementary term under UCC § 2-207(3) because it is an additional term that appears in only one writing and therefore cannot be restored through the gap-filler mechanism.
How do supplementary terms interact with a waiver of consequential damages that appears in only one form?
A waiver appearing in only one writing drops out under the knock-out rule. The contract is then completed by the agreed terms plus the UCC's gap-filler provisions that permit recovery of foreseeable consequential damages.
939 F.2d 91 (3d Cir. 1991)
…case the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of the Act. : Two other issues were raised by Step-Saver. First, Step-Saver argued that the box-top disclaimer is either unconscionable or…
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