Also known as: additional term · supplementary terms
Written by attorneys — see sources below.
Provisions proposed in an acceptance or confirmation that supplement or vary the terms of an offer. Between merchants such provisions enter the contract unless the offer limits acceptance to its own terms, the additions materially alter the bargain, or objection is seasonably given. Consistent provisions may also supplement an integrated writing unless the writing was intended as a complete and exclusive statement of the agreement.
Aurora Biotech sent Apex Dynamics a purchase order for 500 units of specialized lab equipment at a fixed price. Apex replied with a written acceptance that added a clause requiring delivery within ten days. Both parties are merchants and the added term did not materially change the deal. The ten-day delivery clause therefore became part of their contract.
Alexis Archer signed a written lease with Argonaut Shipping for warehouse space that contained no mention of parking rights. During negotiations the parties orally agreed that Archer could use two designated parking spots at no extra charge. The court admitted evidence of the parking arrangement because the lease was not completely integrated. The additional term therefore supplemented the written lease.
Amber Alonzo ordered custom circuit boards from Ashford Manufacturing. Alonzo's purchase order and Ashford's acknowledgment contained conflicting warranty clauses. Both parties performed by shipping and accepting the boards. Their conduct established a contract whose terms consisted of the points on which the writings agreed plus any supplementary UCC provisions.
Andrew Avery ordered a computer from a mail-order vendor. The box contained terms including an arbitration clause that arrived after payment. Avery used the computer without returning it. The arbitration clause became part of the contract under the vendor's standard practice of including additional terms with the product.
Rich and Enza Hill ordered a computer from Gateway 2000 by telephone, providing a credit card number for payment. A box containing the computer along with a list of terms arrived at their residence. The Hills kept the computer more than thirty days before complaining about its components and performance. The Hills filed suit in federal court. They argued that the product's shortcomings make Gateway a racketeer, with mail and wire fraud as the predicate offenses, and sought treble damages under RICO for themselves and a class of all other purchasers. Gateway asked the district court to enforce an arbitration clause contained in the list of terms. The district court refused enforcement, writing that the present record is insufficient to support a finding of a valid arbitration agreement between the parties or that the plaintiffs were given adequate notice of the arbitration clause. Gateway took an immediate appeal. The Hills concede that they noticed the statement of terms but deny reading it closely enough to discover the agreement to arbitrate. The box from Gateway was crammed with software, including an operating system without which the computer was useful only as a boat anchor, as well as many application programs. Gateway's advertisements state that their products come with limited warranties and lifetime support.
View caseAustin Abbott signed an employment contract containing an arbitration clause that required employees but not the employer to arbitrate claims. The clause lacked mutuality and could not be saved by adding new terms. The court refused to reform the agreement by augmentation and held the clause unenforceable.
Mary Armendariz and Dolores Olague-Rodgers were hired by Foundation Health Psychcare Services, Inc. in July and August of 1995 for positions in the Provider Relations Group and were later promoted to supervisory roles with annual salaries of $38,000. As a condition of their employment, the employees signed application forms and separate arbitration agreements that required binding arbitration of any dispute arising from termination of employment. The arbitration clause provided that the employees' exclusive remedies would be limited to back wages from the date of discharge until the arbitration award and expressly excluded other remedies such as reinstatement and injunctive relief. On June 20, 1996, the employees were informed that their positions were being eliminated and that they were terminated. During their employment, they alleged that supervisors and coworkers engaged in sexually based harassment and discrimination, and they claimed the termination occurred because of their perceived or actual sexual orientation. The employees filed a complaint against the employer and its parent company alleging a cause of action for violation of the FEHA as well as tort and contract claims for wrongful termination, seeking general damages, punitive damages, injunctive relief, and attorney fees and costs. The employer filed a motion to compel arbitration under Code of Civil Procedure section 1281.2, supported by declarations. The trial court denied the motion, concluding that the arbitration agreement was an adhesion contract containing provisions so one-sided as to shock the conscience, including the requirement that only employees arbitrate claims and the limitation of damages to backpay. The Court of Appeal reversed the trial court's order, holding that the damages provision was unconscionable but that the remainder of the agreement should be enforced after severance. The Supreme Court granted review of the case.
View caseAlan Ackerman sold a ranch to Alice Atkins under a deed that granted an option to repurchase but was silent on assignability. The parties had separately discussed that the option would remain personal to Ackerman. Evidence of that consistent additional term was admissible because the deed was not completely integrated. The option therefore could not be assigned.
Dallas Masterson and his wife Rebecca owned a ranch as tenants in common. On February 25, 1958, they conveyed it to Medora and Lu Sine by a grant deed. The deed reserved unto the grantors an option to purchase the property on or before February 25, 1968 for the same consideration as being paid heretofore plus the depreciation value of any improvements the grantees might add after two and a half years from the date. Medora is Dallas's sister and Lu's wife. Since the conveyance Dallas has been adjudged bankrupt. His trustee in bankruptcy and Rebecca brought this declaratory relief action to establish their right to enforce the option. The case was tried without a jury. Over defendants' objection the trial court admitted extrinsic evidence that by the same consideration as being paid heretofore both the grantors and the grantees meant the sum of $50,000 and by depreciation value of any improvements they meant the depreciation value of improvements to be computed by deducting from the total amount of any capital expenditures made by defendants grantees the amount of depreciation allowable to them under United States income tax regulations as of the time of the exercise of the option. The court also determined that the parol evidence rule precluded admission of extrinsic evidence offered by defendants to show that the parties wanted the property kept in the Masterson family and that the option was therefore personal to the grantors and could not be exercised by the trustee in bankruptcy. The court entered judgment for plaintiffs, declaring their right to exercise the option, specifying in some detail how it could be exercised, and reserving jurisdiction to supervise the manner of its exercise and to determine the amount that plaintiffs will be required to pay defendants for their capital expenditures if plaintiffs decide to exercise the option. Defendants appeal.
View caseBetween merchants the additional terms enter the contract unless the offer expressly limits acceptance to its own terms, the additions materially alter the bargain, or objection is given within a reasonable time. The terms are treated as proposals for addition rather than automatic rejections of the offer.
Supporting sources
Evidence of a consistent additional term is admissible to supplement an integrated agreement unless the court finds the writing was intended as a complete and exclusive statement of the parties' bargain. The rule bars only contradictory terms or terms that would have been included if agreed upon.
Supporting sources
Conduct recognizing the existence of a contract is sufficient to establish a contract even if the writings do not agree. The resulting contract consists of the terms on which the writings agree together with any supplementary terms supplied by the UCC.
Supporting sources
…was a "merchant" and they are not. Section 2-207(2) of the UCC, the infamous battle-of-the-forms section, states that "additional terms [following acceptance of an offer] are to be construed as proposals for addition to a contract. Between merchants such terms become part of the contract unless ...". Plaintiffs tell us that…