Idaho Power Co. v. Westinghouse Electric Corp.
596 F.2d 924 (9th Cir. 1979)
Idaho Power sent an inquiry to
Westinghouse about buying a voltage regulator. Westinghouse sent back a
quote with some terms and conditions on the back, including a limitation
of liability.
Idaho Power sent a purchase
order for the regulator with language saying that acceptance of the order
trumped all previous agreements
Basically, Idaho Power was
implying that that only the provisions explicit in the purchase order
were binding, they were not agreeing to Westinghouse's limited liability
provision.
Westinghouse took the money
and sent Idaho Power a regulator. After it was installed, it caught fire
destroying some other machinery.
Westinghouse replaced the
regulator, but refused to pay for the damaged machinery.
Idaho Power sued Westinghouse
for damages, based on breach of contract and negligence.
The Trial Court awarded
summary judgment to Westinghouse based on the liability limitations on
their form. Idaho Power appealed.
The Appellate Court affirmed.
The Appellate Court found
that Idaho Power's response to the quote was an acceptance even though additional terms were added.
The Court also concluded
that this acceptance was not conditional on any new or different terms.
Idaho Power did not come right out and say that they weren't accepting
unless Westinghouse agreed to supersede all previous agreements.
The Court considered whether
Westinghouse's disclaimer was part of the contract. The Court found that
Idaho Power failed to contest Westinghouse's disclaimer, and so the
disclaimer gets into the contract under UCC §2-207(2).
UCC §2-207 says that in commercial transactions, the
common law the mirror image rule will not be used.
Instead, a deviant acceptance is
still treated as an acceptance as long as it is not expressly
conditional on new and different terms.
Basically, if you go ahead
with the deal, the original contract is valid. If you want your own
terms, you have to expressly reject the original contract and refuse to
accept the goods until they accept your terms.
According to UCC
§2-207(2), if there is a dispute,
the terms of the acceptance are the ones that will be applied, unless:
The offer expressly limits
acceptance to the original terms
The new terms materially
alter the deal,
Notification of objection
to the new terms is given, and
