K: A Common Law Approach to Contracts

UCC 2-207 and the Battle of the Forms

Article 2 assumes that, in the battle of the forms, each party will focus on certain “dickered” terms, such as the
description of the goods, price, and quantity, but will not read anything else contained in the other party’s
form. The Code dispenses with the last shot rule and replaces it with what might be called a first shot rule: the
party that sends the offer (the first legally effective form) has a decided advantage in shaping the ultimate
terms of the agreement. You should focus on several key aspects of 2-207:

1. Definite Expression of Acceptance (DEA):

2-207 upends the mirror image rule by providing that acceptances that do not mirror the offer can still
operate as acceptances. If the acceptance is a “definite... expression of acceptance,” then it is an acceptance.
(It also has to be “seasonable” – but that is not our primary concern in this discussion.) An acceptance is a
DEA if it agrees with the offer on the core (“dickered”) terms – generally, subject matter, price, and quantity.
You should recognize that these core terms are a subset of material terms. Subsection (2) only makes sense if
an acceptance may be a DEA even though it differs from the offer on material terms. If an acceptance is not a
DEA, then it is simply an additional step in the parties’ negotiations (and in many jurisdictions will be treated
as an offer).

2. Additional and/or Different terms in the DEA:

If the acceptance is a DEA, then additional terms are proposals for addition. If either party is not a merchant
(2-104(1)), the terms only become operative if the offeror consents explicitly to them. If both parties are
merchants, then the terms may become part of the contract under 2-207(2) – but only if none of the three
listed factors are met.

3. Expressly conditional expressions of acceptance:

A DEA operates as an acceptance “unless acceptance is expressly made conditional on assent to the additional
or different terms.” (2-207(1) last clause). Courts typically require the offeree to use language (almost)
identical to the statutory clause as necessary to realize the provision’s purpose. If the offeree does, then the
DEA does not operate as an acceptance. While there has been some disagreement over what happens at this
point, most courts and scholars generally agree that the proper analysis is to treat the parties as failing to
reach an agreement in their writings. (The arguments supporting this outcome relate to the purpose of 2-207,
the purpose of the UCC generally, and principles of statutory construction as well as contract law.) If the
offeror expressly assents to the offeree’s conditional DEA, then we don’t have any real problem. But, if the
offeror does not, we do not want to revert to the common law mirror image rule (which has been preempted
by Article 2 in this setting). Instead, we look to the parties’ subsequent conduct to see if 2-207(3) should
apply.

Page 1 of 2
Consider the following hypothetical

Rotten Apples Hypothetical

Vanderbilt sent a purchase order to Apple for 1000 iPad2s with 32 GB memory, Wi-Fi, and 3G for $500 each.
The form states in small print “payment due 30 days after delivery.”

Apple responded with a form that repeated the first sentence above, but also provided in fine print that
payment was due prior to delivery, 10% interest would be due on late payments, disputes would be
arbitrated, and all warranties were disclaimed.

Apple shipped the iPad2s, and Vanderbilt accepted delivery. Within one week, the iPad2s were
malfunctioning. Apple refused to make repairs pointing to the warranty disclaimer, and it argued that
Vanderbilt’s payment is past due and accruing interest.

Questions:

1. Under the common law, is Apple correct?

a. what is the offer?
b. what is the acceptance?
c. what are the terms?

2. Under the UCC, is Apple Correct?

a. what is the offer?
b. what is the acceptance?
c. what are the terms?
i. will interest be due upon past-due payments?
ii. will disputes be arbitrated?
iii. will warranties be disclaimed?
iv. will payment be due prior to delivery?

3. What if Vanderbilt called to place an order (orally) and Apple responded with its form?

4. What if Vanderbilt and Apple formed their agreement over the phone and Apple sent the form with
the iPad2s?

5. What if Apple’s form also stated “acceptance is made expressly conditional on buyer’s assent to these
terms”?
a. What would be the terms of the parties’ agreement?

6. What if Apple’s form was for 16 GB memory iPad2s? for iPad2s without 3G?

Page 2 of 2