Diamond Fruit Growers, Inc. v. Krack Corp.
794 F.2d 1440 · U.S. Court of Appeals · 1986
Facts
Krack Corporation, a manufacturer of cooling units, purchased steel tubing from Metal-Matic, Inc. for ten years, following a consistent course of dealing where Krack sent purchase orders and Metal-Matic responded with acknowledgment forms and shipments. Metal-Matic's acknowledgment forms disclaimed liability for consequential damages and limited liability for defects, stating that acceptance was expressly conditional on Krack's assent to these terms. Krack's purchasing manager, Allen Zver, discussed these terms with Metal-Matic's executive, Robert Van Krevelen, objecting to them, but Metal-Matic refused to change them. Despite the objection, Krack continued to accept and pay for tubing. Later, a cooling unit sold by Krack to Diamond Fruit Growers, Inc. began leaking ammonia from a steel tubing coil, damaging fruit in Diamond's controlled-atmosphere warehouse.
Procedural history
Diamond Fruit Growers, Inc. sued Krack Corporation. Krack then filed a third-party complaint against Metal-Matic, Inc. and Van Huffel Tube Corporation. The district court granted Van Huffel's motion for a directed verdict but denied Metal-Matic's similar motion. A jury returned a verdict in favor of Diamond against Krack, and found Krack entitled to 30% contribution from Metal-Matic. Metal-Matic's motion for judgment n.o.v. was denied, and it appealed the judgment.
Issue
Did Metal-Matic's disclaimer of liability for consequential damages become part of the contract with Krack under U.C.C. § 2-207, when Metal-Matic's acceptance was expressly conditional on Krack's assent to those terms, but Krack objected yet continued to accept and pay for the goods?
Holding
No, Metal-Matic's disclaimer of liability did not become part of the contract. Krack's continued acceptance of tubing after objecting to the terms did not constitute the specific and unequivocal assent required for an expressly conditional acceptance.
Rule
Under U.C.C. § 2-207, if an acceptance is expressly made conditional on the offeror's assent to additional or different terms, those terms do not become part of the contract unless the offeror gives specific and unequivocal assent. If such assent is not given, but the parties proceed with the transaction as if a contract exists, the terms of the contract consist of those on which the parties' forms agree, plus any supplementary terms provided by the U.C.C. This approach avoids reinstating the common law 'last shot' rule, which would unfairly give one party its terms simply for sending the last form.
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