Also known as: proposals for addition
Written by attorneys — see sources below.
An additional term contained in a written acceptance or confirmation of an offer for the sale of goods. Between merchants the term is treated as an offer to include it in the contract unless the offer expressly limits acceptance to its own terms, the term would materially alter the contract, or timely objection is given.
Global News Network sent CineTech Cameras a purchase order for studio cameras that listed quantity and price but said nothing about damages. CineTech replied with a timely acknowledgment that matched those terms and added a clause excluding liability for consequential damages. When the cameras later failed and Global sought lost advertising revenue, the exclusion operated only as a proposal for addition that did not automatically enter the contract.
Northern Wireless offered Gate Broadband routers under a one-year repair-or-replace warranty that excluded consequential damages. Gate's purchase order accepted the quantity and price but added a service-credit formula for downtime. Northern shipped the routers without objecting, yet the added service-credit term remained only a proposal for addition that never became part of the agreement.
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 caseThe term is treated as a proposal for addition. It enters the contract only if the offer does not limit acceptance to its own terms, the term does not materially alter the contract, and no timely objection is raised.
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No. Merchant status removes the need for express acceptance of the proposal but still requires that the term not materially alter the contract and that no timely objection be given.
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The exclusion is a proposal for addition. It does not automatically become part of the contract because it often materially alters the risk allocation and therefore requires express assent.
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The court examines whether the term would cause surprise or hardship to a reasonable merchant in the position of the recipient, such as by shifting substantial risk or limiting remedies that would otherwise be available under the UCC.
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…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 ProCD came out as it did only because Zeidenberg was a "merchant" and the…