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 Princess Cruises v. General Electric
@ Pretty typical battle of the
forms situation
@ Purchase order
@ Fixed Price Quotation
@ Repair work improperly
done
@ $4 million damages (on
$230K contract!)
@ UCC? Sale of Goods?
@ A ´mixedµ contract
@ So which controls? ² Predominant factor
‰ estion of UCC Applicability
@ manguage of the contract

@ Nature of the business of supplier

@ Intrinsic worth of the materials (compared

w/labor)

@ ´thrustµ or ´purposeµ of the transaction

 Princess Cruises under Common maw:
@ Ghat was the offer?
@ Princess Cruises· purchase order

@ Did GE accept?
@ No ² the Final Price Quote was a counter
counter--offer
@ Mirror Image Rule

@ Did Princess accept the counter-

counter-offer?
@ Yes« how?
@ By allowing the work to proceed & paying for it
@ The ´mast
´mast Shotµ
Shotµ Rule

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 U.C.C. d 2-207(1)
I: Do Ge Have A Contract?
@ Exchange of Gritings
@ Definite & Seasonable Expression of Acceptance
operates as legal acceptance
@ {No Mirror Image Rule}
@ Only a counteroffer/rejection if it states that acceptance is
expressly conditional on new terms

@ Gritten Confirmation of Oral Agreement

@ Gritten confirmation operates as acceptance
 U.C.C. d 2-207(2)
II(a): Ghat are the Contract·s Terms?
@ Additional Terms = Proposed additions to contract
@ IF both parties are merchants ² part of contract
@ Unless:
 offer expressly limited acceptance (no new terms will be
permitted in your acceptance)
2 the additional terms materially alter the contract
3 offeror notifies objection to terms within a reasonable time

@ If parties are not both merchants, additional terms

are º
part of the contract
 U.C.C. d 2-207(2)
II(b): Ghat are the Contract·s Terms?
@ Different Terms = ? (3 approaches)
 NOT part of the contract because 2- 2-207(2) does not
mention different terms (but this gives a ´first shotµ
result)
2 Apply same analysis as ´additional termsµ (but
typically ´different termsµ would cause a materially
alteration ² so there is a ´first shotµ result anyway)
3 Most courts: Õifferent
erms Kº CK EACH

HER U

 U.C.C. d 2-207(3)
III: Ghat if No Gritten Contract
@ Ghat happens if the parties expressly limit the
additional/different terms from coming in AND
expressly require that their terms must come in?
@ No contract under d 2-207()

@ BUT« you can still have a contract

@ Mutual Assent established by cond ct
 If Contract by performance«
What are its terms?

@ Those terms upon which parties forms agreed

(or other terms to which the parties agreed)

PmUS

@ U C C ´gap fillersµ
 ÷
  

 
Ms the Mndemnification Clause part of the contract between the
parties?

@ Seller·s ´Proposalµ of Nov 7th

@ Buyer·s ´Purchase Orderµ of Jan 
th

@ Seller·s ´Order Acknowledgementµ of Feb 5th

What are the Contract·s
erms?

 Part of the Contract Terms??
@ UCC d 2-207(2)
@ Brown Machine & Hercules ² both merchants
@ These are Additional (not ´differentµ terms)

@ Did offer expressly limit acceptance to terms of

offer? Did offeror reject terms?

@ If not« the new term comes in unless the term is a

material change
@ Comments to UCC d 2-207(2)
@ ´Surprise or Hardshipµ test
 r« did term come in
d e to B yer Assent?

]Express assent cannot be presumed by silence or mere

failure to objectµ
 Recap (Applying 2-
2-207)
 Ghat constituted the offer?
2 Gas response acceptance or counteroffer?
3 IF acceptance: did additional terms come into the
contract?

@ Ghat if no advance rejection by buyer?

@ Ghat if seller had only ]conditionally acceptedµ buyer·s order?
@ Ghat if both parties denied others· changes?
 Proposed Revised UCC Article 2
@ Revised d 2-206(3): definite & seasonable
expression of acceptance = legal acceptance

@ Revised d 2-204(): If exchange of documents

never results in a contract, parties· performance
still can = contract

@ Revised d 2-207«
 PROPOSED Revised d 2-207:
>Subject to parol evidence rule«] if
(i) conduct by both parties recognizes the existence of a contract
although their records do not otherwise establish a contract, >or]
(ii) a contract is formed by an offer and acceptance, or
(iii) a contract formed in any manner is confirmed by a record
that contains terms additional to or different from those in the
contract being confirmed, the terms of the contract are:
(a) terms that appear in the records of both parties;
(b) terms, whether in the record or not, to which both
parties agree; and
(c) terms supplied or incorporated under any provision of
this act
 Problem 2-
2-4
@ Sept 5 ² B & S discuss availability of materials

@ Oct  (AM) ² B sends fax to S; specifies price &

delivery on /5

@ Oct  (PM) ² S sends fax to B; confirms order &

adds several conditions

@ Oct 7 ² B pays S 0% of purchase price

@ Nov 4 ² S tells B of delivery delay

 What are the Contract·s TERMS?
@ Did B assent to all the new terms?
@ Did offer expressly limit terms? Did B object after getting
new terms?
@ Question is: 6re the additional terms material
alterations?
@ š
Mnterest 6ccrual on unpaid amounts
@ š
B to pay reasonable attorney fees
@ š
6rbitration Clause
@ š
Provide manufacturer·s warranty
@ š
Delivery limitation on liability
How abo t 1st lang age change?
Seller will be liable for any damages caused by delivery
delay

@ This language is not additional ² it is

DMERENT!
@ mast shot? (no contract)
@ First shot?

@ Knock out?
How abo t 2nd lang age change?
Change of terms is not allowed as acceptance

@ This makes each form a counteroffer

@ Common law - mast shot? (no contract)
@ UCC 2-
2-207(3) (contract by conduct)
@ Terms:
@ Agreed Terms
@ UCC Gap Fillers
 CISG Art. 19
@ More like the common law
@ Mirror Image Rule ´softµ
@ Depends on definition of material
@ Materiality is expansively defined in Art 
(3)

@ Art () ² conduct can establish mutual assent