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Reproduced with the permission of 15 Transnational Law and Contemporary Problems (Fall 2005) 243-286

A Comparative Analysis of the "Battle of the Forms"

Kevin C. Stemp [*]

  1. Introduction
  2. U.S. Jurisdictions
    1. Uniform Commercial Code Section 2-207
      1. Does a Contract Exist?
      2. What are its Terms?
      3. Divergent Views
    2. Illinois
    3. California
    4. New York
  3. Foreign Jurisdictions
    1. England
    2. United Nations Convention on Contracts for the International Sale of Goods (CISG)
    3. UNIDROIT Principles of International Commercial Contracts (PICC)
    4. The Principles of European Contract Law (PECL)
      1. Boilerplate (General Conditions) Conflicts
      2. Non-Boilerplate ("Front-Form") Conflicts
  4. Conclusion
  5. Examples
    1. Materially Different Term
      1. California
      2. New York
      3. Illinois
      4. England
      5. CISG
      6. PECL
      7. PICC
    2. Materially Different Term; Both Parties Require Own Terms
      1. California and New York
      2. England
      3. CISG
      4. PECL
      5. PICC
    3. Immaterially Different Terms; Front-Form Conflict; Reneging
      1. Illinois
      2. California
      3. New York
      4. England
      5. CISG
      6. PECL
      7. PICC
    4. Effect of Battling CISG Opt-Out Clauses.

I. INTRODUCTION

The "Battle of the Forms" is one of the most complicated areas of contract law, made even more difficult due to divergent treatment among jurisdictions. This Article seeks to inform and guide commercial counsel when contracting for the sale or purchase of goods locally and globally by providing a concise comparison of the battle as played out in major commercial jurisdictions worldwide.

In the United States, the application of Uniform Commercial Code (UCC) Section 2-207 is far from uniform. Illinois, California, and New York rulings are examined as illustrative of the divergent interpretations and resolutions applied to contract disputes under the Code. Commercial counsel need to understand these divergent approaches and to recognize how contract disputes may lead to different outcomes in each jurisdiction.

Likewise, the examination of several prominent foreign and international lex mercatoria highlights the consequences of choosing between governing laws. English law, the United Nations Convention on Contracts for the International Sale of Goods (CISG), the International Institute for the Unification of Private Law (UNIDROIT) Principles of International Commercial Contracts (PICC), and the Principles of European Contract Law (PECL) are analyzed and found to lead to very different outcomes. [page 244]

II. U.S. JURISDICTIONS

A. Uniform Commercial Code Section 2-207

UCC Section 2-207 Additional Terms in Acceptance or Confirmation [1]

"(1) A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms.

"(2) The additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless:

(a) the offer expressly limits acceptance to the terms of the offer;
(b) they materially alter it; or
(c) notification of objection to them has already been given or is given within a reasonable time after notice of them is received.

"(3) Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract. In such case the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of this Act."

UCC Section 2-207 is a confusing provision, subject both to competing interpretations and periodic calls to strike it from the Code. Indeed, it is often said that the confusion surrounding Section 2-207 caused the authors of the CISG to forego the Section 2-207(3)-style "knock-out" rule in favor of the less preferable, but easier to apply, "last-shot" rule.[2] Section 2-207 will be revised and clarified in the next promulgation of the Code.[3] [page 245]

Section 2-207 separates the question, "Does a contract exist?" from "What are its terms?" and operates independently to answer these two issues.

1. Does a Contract Exist?

UCC Section 2-207(1) is primarily concerned with finding the existence of a contract. So long as "dickered terms"[4] -- the most important terms (e.g., price, quantity, quality, etc.) that businesspeople "dicker" over -- are agreed, Section 2-207(1) will find a contract notwithstanding differences in boilerplate or other terms. Section 2-207(1) casts its net widely to find the formation of contracts where, under the common law, a rejection and counter-offer would have resulted. Even when the writings of the parties are hopelessly conflicted, or when there are no writings, if the conduct of the parties so indicates, Section 2-207(3) will find the existence of a contract. Section 2-207 is slanted steeply toward finding the formation of a contract and away from the traditional doctrine of rejection and counter-offer.[5]

2. What Are Its Terms?

Once Section 2-207(1) or Section 2-207(3) finds the existence of a contract, the next step is to determine its terms. If formation is found through Section 2-207(3) -- as is the case when there are no writings or the writings are hopelessly conflicted -- the Code takes the "knock-out" rule approach, including in the contract only the terms upon which both parties agree. Everything else gets "knocked-out" and replaced with the default provisions of the UCC, considered to be "neutral" to both parties.[6]

If the writings of the parties are not hopelessly conflicted, the logic of Section 2-207 is to base the contract's terms around these writings, rather than to substitute the UCC's default provisions en masse. In theory, this should result in terms closer to what the parties would have chosen had they taken the time to agree on all the terms.[7] Section 2-207(2) is called upon to sort out which terms will be included in the contract.

While Section 2-207(1) specifically references "additional or different terms," Section 2-207(2) does not. Read literally, Section 2-207(2) only refers to "additional terms" stating that the additional terms in the acceptance are to be treated as proposals for addition to the contract, and that between merchants, such proposals will become part of the contract unless: (a) the [page 246] offer expressly limits acceptance to its own terms; (b) the proposals would materially alter the contract; or (c) the offeror objects to the proposed terms. If (a), (b), or (c) is satisfied, the additional terms are stricken from the contract. What if the variant terms are not "additional" but "different"?[8] This is where the confusion and controversy begin.

3. Divergent Views

There are at least four divergent interpretations and resolutions of this issue under Section 2-207(2). Under the common law, a "different" term would create a counter-offer, and if followed by performance, would be deemed accepted and bind the parties. This is commonly referred to as the "last-shot" rule.

However, Section 2-207(1) specifically rejects this analysis and mandates that neither "additional" nor "different" terms turn an acceptance into a counter-offer;[9] instead, a contract is formed. Yet, it is unclear what should be done with the "different" terms because the text of Section 2-207(2), when read literally, only applies to "additional" terms.

One view is that this lack of clarity is a drafting error, and that "different" terms should be eligible for the same Section 2-207(2) treatment as "additional" terms.[10] A second view reads the Code literally with the effect of denying the "different" terms consideration under Section 2-207(2) -- effectively excising them from the contract.[11] A third view prefers to apply the "knock-out" rule to remove the "different" terms from both acceptance and offer, substituting UCC default provisions (if any) in their place. A fourth view applies a "best-shot" rule that uses the terms of the party with the "fairest" boilerplate ignoring the other party's (less "fair") terms in their entirety -- similar in effect to final offer arbitration.[12]

The "knock-out" view is advocated by Professor White and forms the majority of courts' treatment throughout the United States. It attempts to neutralize the impact of who fired the first or the last shot, by knocking [page 247] "different" shots out, and substituting the UCC default treatments in their place.[13] "Additional" terms are always analyzed under the Section 2-207(2) framework.

Professor Summers, however, advocates a different approach. Finding Section 2-207(2) inapplicable to "different" terms and finding no support for Professor White's "knock-out" approach under the Code,[14] he would excise the "different" terms from the contract, letting the offeror's terms stand.[15] This approach bolsters the traditional concept that the offeror is the master of the offer,[16] and it creates a "first-shot" advantage for "different" terms, which may not be justified given the liberalizing purpose of Section 2-207 and Section 1-102(1).[17]

Professor Goldberg's "best-shot" view first examines both parties' standard terms to discern which one is, on balance, more "fair,"[18] and then adopts the "fairer" party's terms in their entirety, while completely rejecting the other party's terms.[19] Unlike Professor White's "knock-out" approach and Professor Summers's "first-shot" approach, Professor Goldberg's "best-shot" approach not only provides a rule to choose among conflicting terms, but also has the effect of reducing the number and degree of boilerplate conflicts.

Under the "knock-out" rule there is no incentive for the parties to choose "neutral" terms [20] -- indeed, there is an incentive to draft terms as one-sided as possible. "If the party is lucky, its terms will govern; if unlucky, the worst that can happen is that the Code default rules will govern."[21] Likewise, the "first-shot" rule suffers from the same criticism -- since all "different" terms in the acceptance are excised, the offeror has a strong incentive to draft one-sided, favorable terms. [page 248]

However, under the "best-shot" rule each party realizes that the more one-sided its terms, the more likely they are to be rejected and replaced by the other party's terms. This provides an incentive for each party to "move towards the center"[22] -- thereby reducing both the risk that the other party's (less favorable) terms will govern, and the number and degree of any remaining boilerplate conflicts. In addition, the "best-shot" approach does not depend upon whether a term is deemed "additional" or "different" since it applies without distinction to all boilerplate conflicts in place of the UCC Section 2-207(2) analysis.

Although Professor Goldberg's "best-shot" rule is robust and is the only proposal that aims at the root of the issue -- reducing the number of conflicting terms -- it remains to be adopted by any jurisdiction.[23]

The view that equates "different" to "additional" -- the simplest resolution of the controversy -- is followed by the Supreme Court of California.[24] While this view may not consider when the shots were fired, it does avoid the somewhat artificial and arbitrary decision of what makes a term "different" rather than "additional." It also avoids the imposition of a separate and somewhat unjustified "knock-out" treatment for only those terms deemed "different." Likewise, it rejects the harsh consequences of Professor Summers's "first-shot" rule, whereby all "different" terms are simply excised (even if immaterial), with the result that the offeror's terms always prevail.

Instead, by treating "different" terms the same as "additional" terms, the California rule promotes consistency and simplicity. As with Professor Summers's approach, it will favor the offer to some extent, but in exactly the same manner and to the same extent that the offer is favored when considering "additional" terms. Under the California rule, materially "different" terms are rejected just as material "additional" terms are rejected.

If one cannot draw a meaningful distinction between an "additional" term and a "different" term, California's analysis is logical: treat them the same. If one can draw a distinction -- perhaps because one party's form is silent on an issue [25] or both parties' terms clearly conflict [26] -- then disparate treatment of [page 249] "additional" and "different" terms, together with the protection that the default rules offer, may be justified.

B. Illinois

Although neither the Illinois Supreme Court nor the state's intermediate appellate courts have spoken on the issue of Illinois's interpretation of Section 2-207, Judge Posner, applying Illinois law, considered the matter at great depth in Northrop Corp. v. Litronic Industries.[27]

Northrop needed several "printed wire boards" for inclusion into a weapons system it was building and put the order out to bid.[28] Litronic sent Northrop its offer to sell four boards for $19,000 each, which also contained terms and conditions granting a warranty of ninety days.[29] Northrop accepted Litronic's bid upon its own purchase order which contained its own terms and conditions including, inter alia, a clause granting a warranty of unlimited duration. Performance ensued.[30]

Five or six months after receiving the highly intricate boards, Northrop determined that they were defective and returned them to Litronic for a refund.[31] Litronic refused, citing the expiration of the ninety-day warranty in its offer.[32]

The court applied Section 2-207(1) to find the existence of a contract, and then found itself embroiled in the Section 2-207(2) "additional" or "different" controversy. The two forms each had their own warranty provisions: Litronic's was for ninety days and Northrop's was unlimited in duration -- clearly a material difference.[33] Judge Posner worked through all the iterations of how a materially different term might be treated to ascertain how Illinois law would proceed.[34]

The court preferred the California approach of assimilating "different" terms to the same Section 2-207(2) treatment as "additional" terms,[35] and [page 250] noted that under such an analysis, Northrop's term would be rejected by Section 2-207(2)(b) as a material alteration. But, Judge Posner reluctantly concluded that the California rule "has too little support to make it a plausible candidate for Illinois, or at least a plausible candidate for our guess as to Illinois's position."[36]

Likewise, the court also considered and rejected the "leading minority" view [37] of excising the materially different term (Northrop's unlimited warranty) and letting the offeror's term stand (Litronic's ninety-day warranty).[38]

In the end, the court concluded that "[b]ecause Illinois in other UCC cases has tended to adopt majority rules ... we start with a presumption that Illinois would adopt the majority view. We do not find the presumption rebutted."[39] Applying the majority rule to this case "knocks-out" both warranties and substitutes the UCC's gap filler -- "a warranty of 'reasonable' duration."[40] In this case, the court found that due to the intricacy of the boards, a "reasonable duration" would extend to cover at least the period of time that Northrop needed to discover the defect.[41]

C. California

California is one of the few states whose highest court has ruled directly on the interpretation and application of Section 2-207. In Steiner v. Mobil Oil Corp.,[42] Steiner was a gas station operator contemplating the purchase of the land his station occupied. Requiring financing, Steiner approached his gasoline supplier, Mobil, to see if it would provide the necessary funds in exchange for a purchase commitment.

Mobil was interested in the transaction and offered to provide $30,000 for Steiner's down payment on the land and $3,000 in improvements, in exchange for Steiner's agreement to purchase 5.8 million gallons of gasoline [page 251] over ten years.[43] The $30,000 was to be treated as a pre-paid discount on the purchase price of gasoline amortized over the life of the contract.

Steiner was concerned about his loss of bargaining power and vulnerability to Mobil's potential price increases, so he insisted upon an irrevocable 1.4 cent per gallon competitive allowance (discount) from Mobil's tank wagon price for the duration of the contract.[44] Mobil's standard terms provided for an allowance that "may be changed or discontinued by [Mobil] at any time upon notice to [Steiner] in writing ..."[45] The forms changed hands, performance was made (Mobil supplied the financing, the property was purchased, and the discount went into effect), and no one noticed the difference in terms for over twelve months when Mobil notified Steiner it was reducing his discount.

Applying the Section 2-207(1) test of "[a] definite and seasonable expression of acceptance ..." the court ruled that Mobil's form was an acceptance of Steiner's offer that included additional or different terms.[46] The treatment of Mobil's additional terms was to be determined through the application of Section 2-207(2). The court ruled that both Section 2-207(2)(a) -- Steiner had expressly limited acceptance to the terms of his offer -- and Section 2-207(2)(b) -- Mobil's proposed terms would materially alter Steiner's offer -- were applicable to the case, and it accordingly excised the onerous terms from the parties' contract.

The court noted that although the parties had not:

"argue[d] that the applicability of section 2-207, subdivision (2), subsections (a), (b), and (c) turns upon whether the terms of Mobil's acceptance were additional to, or instead different from, Steiner's offer ... the question of the relevance of the distinction between 'additional' and 'different' terms has become a matter of some controversy among courts and commentators ... and [w]e conclude that the applicability of section 2-207, subdivision (2), should not turn upon a characterization of the varying terms of an acceptance as 'additional' or 'different'."[47]

The court listed three reasons for its assimilation:

"First, Uniform Commercial Code comment 3 specifically states that '[w]hether or not additional or different terms will [page 252] become part of the agreement depends upon the provisions of subsection (2)' ... Second, the distinction between 'additional' and 'different' terms is ambiguous ... Third, the distinction between additional and different terms serves no clear purpose."[48]

In California, "different" terms are treated the same as "additional" terms under the Section 2-207(2) analysis. This view has been both praised [49] and criticized [50] by other courts and commentators, but as of yet, has not been explicitly adopted by any other state.

D. New York

Unfortunately, and somewhat surprisingly, there are very few New York appellate court cases dealing directly with Section 2-207.[51] Further, no New York cases discuss the "additional" versus "different" terms controversy. New York cases, if they reach the issue at all, have always implicitly considered variant terms under Section 2-207(2) without discussion to their "additional" or "different" nature. As such, New York seems to be tacitly employing the California rule of according "additional" and "different" terms the same treatment under Section 2-207(2).

The best support for New York's adoption of the California rule comes from the New York Annotations to UCC Section 2-207:

"If a contract is formed, both the 1960 New York statute and the Code treat the varying terms as proposals for addition to the contract. The Code adds a means whereby in a limited class of cases these proposals become part of the contract. At this point a materiality test is employed by the Code."[52] [page 253]

The New York annotation does not distinguish between "additional" and "different" terms.

Likewise, in Italfabrics, Ltd. v. Jay Jacobs, Inc., applying New York law, the court also assimilated "different" terms to "additional" treatment: "Under the U.C.C. rule, a different or additional term which 'materially alters' a contract between merchants is simply to be treated as a proposed addition or change; the existence of the contract itself is not, thereby, thrown into doubt."[53]

Although there is no definitive answer as to which approach New York follows when dealing with "different" terms, it appears that the practice has been to treat them the same as "additional" terms and run them through the Section 2-207(2) analysis. In essence, New York has tacitly practiced the California rule. [page 254]

[Click here for Figure 1: UCC Sec. 2-207 Additional Terms in Acceptance or Confirmation] [page 255]

III. FOREIGN JURISDICTIONS

An examination of several different legal systems -- both common law and civil law -- shows how the battle of the forms is first framed and then resolved outside of the United States.[54]

The traditional approach (as evidenced by the UCC, English law, and the CISG) generally accords all terms equal importance and equivalent treatment, regardless of whether they appear on the front in bold, enlarged typeface, or in the boilerplate on the back in tiny print. Whereas the more modern legislation [55] (as evidenced by PECL and PICC) first asks where the conflicting terms arise -- on the front in the main terms where they are likely to be observed, or in a less conspicuous place, such as in the general terms and conditions which are seldom read -- and then applies a different treatment accordingly.

The modern approach avoids much of the controversy surrounding the UCC's process of sifting through both parties' boilerplates to distinguish between the additional, different, and material terms that can and cannot make it into the final contract. Instead, once it is determined that a boilerplate conflict exists the modern approach is relatively robust: simply apply the "knock-out" rule.[56]

A. England

England still conforms to the "last-shot" rule. In the leading battle of the forms case, Butler Machine Tool Co. Ltd. v. Ex-Cell-O Corp. (England) Ltd., there was an exchange of forms between Butler (Seller) and Ex-Cell-O (Buyer) regarding the purchase of a "double column plano-miller machine."[57] Seller's form had a price escalation clause in its terms and conditions that allowed for an increase in the sales price if costs increased during the period of manufacture. Likewise, Buyer's form had its own terms and conditions -- naturally, without a price escalation clause. [page 256]

Each of the three Court of Appeal [58] Judges gave separate opinions, but all ruled in favor of Buyer. Lord Denning MR [59] explained that the lower court's decision to apply Seller's terms throughout the whole dealing due to the clause that "[Seller's] terms and conditions shall prevail over any terms and conditions in the Buyer's order"[60] did "not apply the traditional method of analysis by way of offer and counter-offer."[61]

Under traditional analysis, Buyer's "acceptance" was actually a rejection of Seller's offer (due to its different terms), and acted as a counter-offer, which the Seller then accepted when it mailed its confirmation of the order to Buyer.

Lord Denning MR then noted that "[i]n many of these cases our traditional analysis of offer, counter-offer, rejection, acceptance and so forth is out-of-date,"[62] and that,

"[t]he better way is to look at all the documents passing between the parties and glean from them, or from the conduct of the parties, whether they have reached agreement on all material points, even though there may be differences between the forms and conditions printed on the back of them."[63]

But applying this analysis is anything but elementary. "In some cases the battle is won by the man who fires the last shot. He is the man who puts forward the latest term and conditions: and, if they are not objected to by the other party, he may be taken to have agreed to them."[64] Yet,

"[i]n some cases, however, the battle is won by the man who gets the blow in first ... if the difference [in terms] is so material that it would affect the price, the buyer ought not to be allowed to take advantage of the difference unless he draws it specifically to the attention of the seller."[65] [page 257]

And finally, "[t]here are yet other cases where the battle depends on the shots fired on both sides."[66] Where there is a concluded contract, but the forms differ, "[t]he terms and conditions of both parties are to be construed together ... [i]f differences are irreconcilable ... then the conflicting terms may have to be scrapped and replaced by a reasonable implication."[67] In the end, Lord Denning MR considered all the documents as a whole and chose one (the Buyer's) as the "decisive" document.[68]

In contrast to Lord Denning MR, both Lawton LJ and Bridge LJ preferred the "classical doctrine" of offer and acceptance, which "[has] been known for the past 130-odd years."[69] The "last-shot" rule thus survives and continues to frame the battle of the forms in Great Britain.[70]

Although the "last-shot" rule imports an undeserved importance upon the last form to change hands and could encourage parties to flood each other with forms, it does have one advantage: it is very easy to apply. [page 258]

[Click here for Figure 2: English Law] [page 259]

B. United Nations Convention on Contracts for the International Sale of Goods (CISG) [71]

CISG Article 19

"(1) A reply to an offer which purports to be an acceptance but contains additions, limitations or other modifications is a rejection of the offer and constitutes a counter-offer.

"(2) However, a reply to an offer which purports to be an acceptance but contains additional or different terms which do not materially alter the terms of the offer constitutes an acceptance, unless the offeror, without undue delay, objects orally to the discrepancy or dispatches a notice to that effect. If he does not so object, the terms of the contract are the terms of the offer with the modifications contained in the acceptance.

"(3) Additional or different terms relating, among other things, to the price, payment, quality and quantity of the goods, place and time of delivery, extent of one party's liability to the other or the settlement of disputes are considered to alter the terms of the offer materially."

The United Nations Convention on Contracts for the International Sale of Goods (CISG) is the product of negotiations between both developed and developing economies, common and civil law systems, and eastern and western nations. Not surprisingly, it enjoys enormous international support and is enforced in over sixty countries, including the United States.[72]

As a treaty of the United States, the CISG is supreme to state law and will, by default, automatically displace the application of the UCC in qualifying international sales contracts that do not specifically disapply the CISG.[73] [page 260]

We immediately note that the default rule under the CISG is to turn a modified acceptance into a counter-offer that rejects the previous offer. If the acceptance/counter-offer is the last document to change hands before performance, its terms will bind the parties. In essence, the traditional understanding is that the CISG's default treatment is the "last-shot" rule.

However, if the variations in the "acceptance" do not "materially alter the terms of the offer," such an acceptance will be deemed valid and the non-material variances are incorporated into the contract, unless the offeror objects. At first glance, this appears substantially similar to the Section 2-207(2) analysis of, in the absence of objection, incorporating non-material additions into contracts between merchants. But CISG Article 19(3) lists a broad range of topics that are deemed to materially alter the contract.

Any deviation from the offeror's terms on, inter alia, price, payment, quality, quantity, place and time of delivery, liability, or dispute settlement, will be deemed a "material alteration," and turn the "acceptance" into a counter-offer. If, as under CISG Article 19(1), the acceptance/counter-offer is the last document to change hands, its terms will bind the parties.

CISG Article 19(3) defines a "material alteration" so broadly that it would, under most jurisdictions' interpretations, capture almost every common battle of the forms scenario and channel the conflict into the "last-shot" analysis -- a treatment identical to English law. However, the CISG is slightly more forgiving than the English rule, because if a term is truly immaterial and passes through the CISG Article 19(3) gauntlet -- including the residual definition of "other things" -- then, notwithstanding the immaterial variance, the acceptance will be valid and will incorporate the differences into the contract, unless specifically objected to. Under the CISG, there is at least the potential to soften the impact of the "mirror-image" and "last-shot" rule.

It is important to note that unlike Section 2-207, which will find the existence of a contract as long as the major (dickered) terms match, the CISG will still allow an offeror to reject an acceptance that contains immaterial variations. In markets with volatile pricing, this right to a pretextual rejection could give the offeror an advantage by allowing it to avoid a contract if, subsequent to making the offer, the price changes to the offeror's detriment.[74] Another important difference is that although the CISG permits a much narrower range of non-material alterations than Section 2-207, it applies the exception against a much broader background. All CISG contracts could potentially benefit, not just contracts between merchants.

It is also important to note that while the majority of courts and commentators have applied the CISG Article 19 "last-shot" treatment to [page 261] battle of the forms cases, there is a growing number of courts that prefer to apply their own national law or to take a "knock-out" approach.[75]

An excellent illustration of this divergence is found in BGH VIII ZR 304/00 (powdered milk),[76] where the Federal Supreme Court of Germany had occasion to interpret CISG Article 19 in the context of a dispute between a German Seller and Dutch Buyer of a powdered milk consignment. The telephonic orders between Buyer and Seller were recorded in written sales confirmations, each containing a statement of exclusive dealing upon Seller's own terms, and incorporating Seller's standard terms and conditions by reference.[77] The confirmations were dispatched, the powdered milk was paid for, and was then shipped without incident.

Buyer duly delivered the powdered milk consignment to its ultimate customer in Algeria who discovered it was spoiled. The ultimate customer then rejected the shipment of defective milk, and Buyer sought reimbursement from Seller of its purchase price and for payment of damages to the ultimate customers, as well as incidental costs arising out of the rejection.[78]

Seller was willing to reimburse Buyer for the purchase price of the defective portion of the consignment, but was unwilling to reimburse Buyer for its payments of damages to Buyer's ultimate customers, citing the limited warranty provision in its standard terms that derogated the CISG's default treatment.[79] Seller also argued that a conflicting clause in Buyer's terms and conditions that limited Seller's liability to the purchase price of the goods [80] was applicable despite the conflict of terms that would trigger CISG Article 19(1)'s rejection and counter-offer procedure, because it was favorable [page 262] for Seller.[81] Seller also argued that under German law, Buyer was not entitled to any recovery.

Instead of applying the traditional and expected "last-shot" interpretation of CISG Article 19, the Federal Supreme Court of Germany instead considered the various solutions to the problem of conflicting general terms, and surmised that the "knock-out" rule was probably the prevailing opinion.[82] The Court thought it wrong to examine both parties' integrated and balanced forms on a clause-by-clause basis in an effort to choose between clauses which might benefit one side or the other.[83] Instead, the Court preferred to substitute the default provisions of the CISG so that the importation of clauses detrimental to a party could be offset by those more favorable and, on the whole, could create an internally balanced contract.[84]

This case, BGH VIII ZR 304/00 (powdered milk) demonstrates Germany's rejection of the "last-shot" rule in favor of a "knock-out" approach when applying the CISG to battle of the forms cases [85] and it clearly illustrates how the interpretation and application of Article 19 CISG can vary widely amongst jurisdictions.[86] [page 263]

[Click here for Figure 3: CISG Article 19] [page 264]

C. UNIDROIT Principles of International Commercial Contracts (PICC) [87]

UNIDROIT PICC Article 2.11-Modified Acceptance

"(1) A reply to an offer which purports to be an acceptance but contains additions, limitations or other modifications is a rejection of the offer and constitutes a counter-offer.

"(2) However, a reply to an offer which purports to be an acceptance but contains additional or different terms which do not materially alter the terms of the offer constitutes an acceptance, unless the offeror without undue delay, objects to the discrepancy. If the offeror does not object, the terms of the contract are the terms of the offer with the modifications contained in the acceptance."

UNIDROIT PICC Article 2.22-Battle of Forms

"Where both parties use standard terms and reach agreement except on those terms, a contract is concluded on the basis of the agreed terms and of any standard terms which are common in substance unless one party clearly indicates in advance, or later and without undue delay informs the other party, that it does not intend to be bound by such a contract."

The UNIDROIT Principles of International Commercial Contracts (PICC) is not a binding instrument, but rather a persuasive and illustrative compilation of international lex mercatoria which can supplement other international uniform law instruments (such as the CISG), or provide a body of law for international transactions that specifically invoke its application.[88]

The PICC blends both the classical "last-shot" treatment of the CISG with the "knock-out" approach of the UCC by separating and treating differently boilerplate conflicts from conflicts over more-explicit terms.[89]

In the absence of a boilerplate conflict, the offer and modified acceptance are analyzed under Article 2.11, which essentially imports the mirror-image and "last-shot" treatment of the CISG, but without the sweeping definition of "materiality."[90] If we assume that businesspeople concentrate on the explicit [page 265] terms (dickered terms) and ignore the boilerplate, then in the absence of a boilerplate conflict, it is reasonable to treat such modified acceptances under the classical doctrine of the CISG, because this is efficient and any variant terms are likely to be observed. Put another way, because there are no conflicts in the boilerplate, any remaining conflicts will be in the prominent front-form where they are likely to be noticed, and therefore, it is unlikely that the resulting contract will have unintended terms or consequences.

But if there is conflicting boilerplate, businesspeople will not notice the divergent terms, and the rationale for applying the CISG disappears. The PICC recognizes this problem and deals with boilerplate conflicts in a separate provision, PICC Article 2.22. Essentially, it applies the "knock-out" rule to prevent either party's unread boilerplate from controlling. Under PICC Article 2.22, contract terms will consist of "... agreed terms and any standard terms which are common in substance ... ." Gaps in the derived terms are filled by the applicable default rules (if any) of the governing jurisdiction.[91]

Thus, the PICC attempts to offer both the efficiency and practicality of the CISG [92] in situations where varying terms are likely to be noticed, while falling back upon the "knock-out" rule to provide a more equitable treatment in situations when differing terms are likely to go unnoticed. [page 267]

[Click here for Figure 4: UNIDROIT PICC Articles 2.11 and 2.22 Modified Acceptance and Battle of the Forms] [page 267]

D. The Principles of European Contract Law (PECL) [93]

PECL Article 2:208: Modified Acceptance

"(1) A reply by the offeree which states or implies additional or different terms which would materially alter the terms of the offer is a rejection and a new offer.

"(2) A reply which gives a definite assent to an offer operates as an acceptance even if it states or implies additional or different terms, provided these do not materially alter the terms of the offer. The additional or different terms then become part of the contract.

"(3) However, such a reply will be treated as a rejection of the offer if:

(a) the offer expressly limits acceptance to the terms of the offer; or
(b) the offeror objects to the additional or different terms without delay; or
(c) the offeree makes its acceptance conditional upon the offeror's assent to the additional or different terms, and the assent does not reach the offeree within a reasonable time."

PECL Article 2:209: Conflicting General Conditions

"(1) If the parties have reached agreement except that the offer and acceptance refer to conflicting general conditions of contract, a contract is nonetheless formed. The general conditions form part of the contract to the extent that they are common in substance.

"(2) However, no contract is formed if one party:

(a) has indicated in advance, explicitly, and not by way of general conditions, that it does not intend to be bound by a contract on the basis of paragraph (1); or
(b) without delay, informs the other party that it does not intend to be bound by such contract.

"(3) General conditions of contract are terms which have been formulated in advance for an indefinite number of contracts of [page 268] a certain nature, and which have not been individually negotiated between the parties."

The Principles of European Contract Law (PECL) was written by European academics in an effort to harmonize commercial law, and as a precursor to what is hoped may one day become a European Civil Code.[94] Although the PECL has not been enacted into law, it is seen as similar in nature to the American Restatement of Contracts -- a set of persuasive principles that may provide guidance when applying other legislation.[95] However, unlike the Restatement, the PECL is drafted into an integrated codification, and is intended to form the basis for future legislation.

The PECL follows the modern approach to the battle of the forms by separating boilerplate conflicts from "front-form" conflicts and applying different analyses accordingly.[96] If the conflicting terms arise from the boilerplate, the terms of the contract are derived from a "knock-out" procedure under PECL Article 2:209.[97] Conversely, if the conflict arises from anywhere else (presumably different terms on the "front" of the contract), a more traditional approach is followed pursuant to Article 2:208.

1. Boilerplate (General Conditions) Conflicts

If the two parties have reached an agreement, except for their conflicting boilerplate, a contract is nonetheless formed upon the agreed terms and any general conditions common to both forms.[98] However, no contract will be formed if either party objects,[99] or has explicitly indicated in advance, and not by way of a clause in its boilerplate, that it will only contract upon its own terms.[100] The PECL is silent on how to fill the gaps created by the [page 269] "knock-out" rule,[101] but it would be reasonable to substitute the default provisions of the applicable governing law.[102] The PECL "knock-out" treatment for boilerplate conflicts is essentially the same as that under the PICC and UCC Section 2-207(3).

In contrast to "front-form" terms, boilerplate is often ignored by businesspeople and conflicting terms go unread until litigation looms. By channeling all boilerplate conflicts through the "knock-out" rule, the PECL, like the PICC,[103] recognizes that it is hardly economical for the parties to review each other's often one-sided and imbalanced general conditions, so it seeks to replace them en masse with the jurisdiction's default provisions, which are considered, at least by the drafters, to be "fair."[104]

2. Non-Boilerplate ("Front-Form") Conflicts

Because PECL Article 2:209 is a special exception, applicable only when there are conflicting general conditions, all other conflicts are analyzed under the more traditional framework of Article 2:208.

A non-"mirror-image" acceptance acts as a rejection and constitutes a counter-offer.[105] However, immaterial modifications in the acceptance will not prevent a contract from being formed, and will become part of the terms of the contract,[106] unless the offeror immediately objects [107] or either party expressly insists upon contracting on its own terms,[108] in which case there is no acceptance.[109]

This treatment is very similar to the CISG, PICC, and UCC Section 2-207 analysis, because immaterial variances do not prevent contract formation unless the offeror objects. However, while under UCC Section 2-207, a contract can form even in the face of material alterations in the acceptance [page 270] (they will just be excised or "knocked-out"), a material variant term under the PECL, CISG, and PICC acts as a counter-offer under the "last-shot" rule.[110]

The PECL limits the application of the "last-shot" rule to situations of "front-form" conflicts [111] where the terms are more likely to be read by businesspeople and are essential to the deal. The prominence of "front-form" terms makes it reasonable to assume that both parties are cognizant of the differences, and thus it is efficient to imply acceptance of the new terms (counter-offer) from silence and subsequent performance, even if the new terms are materially different.

Analyzing this particular subset of conflicts under the "last-shot" rule seems to be more economical and practical than applying the UCC Section 2-207(2) analysis of stripping away all material alterations (or knocking them out) from the acceptance. UCC Section 2-207(2) is a blunt and unwieldy tool. It attempts to protect the offeror from the effects of unnoticed material alterations in the acceptance's boilerplate, but in doing so, it also sweeps up all the noticed material alterations in the acceptance -- something from which the offeror probably does not need protection [112] and may hinder the parties' autonomy to conclude the deal on the terms of their choosing.

The modern approach of the PECL and PICC avoids this problem by providing the protection where it is needed (the unread conflicting boilerplate gets "knocked out"), while still allowing for a great deal of party autonomy where the protection is not needed (the "front-form" conflicts). [page 271]

[Click here for Figure 5: PECL Articles 2:208 and 2:209 Modified Acceptance and Conflicting General Conditions] [page 272]

IV. CONCLUSION

This Article has attempted to identify and understand the "battle of the forms" issues and the consequences surrounding the choice of a governing law in battle of the forms situations under both domestic and international contracts for sales and purchases of goods.

In the United States, the UCC treatment is far from "uniform." The "knock-out," "drop-out," "best-shot," and California rule treatments were discussed and contrasted with the traditional "mirror-image" and "last-shot" rules under English law and the traditional interpretation of the CISG. The modern approach under the PECL and PICC of bifurcating boilerplate disputes from "front-form" conflicts was examined and found to hybridize elements of both the traditional (CISG/English) analysis with the UCC's "knock-out" treatment -- leading to different outcomes depending upon where the conflicting terms arise (boilerplate or "front-form").

An Examples section, provided infra Part V, highlights the differences in outcomes between the various jurisdictions. This Article, and the examples that accompany it, provide a quick and accurate synopsis of the law highlighting the differences among choices of governing law in the context of the battle of the forms.

V. EXAMPLES

These scenarios were contrived to illustrate the differences in treatment between the various legal systems. In the following scenarios, the reader may assume that both parties are merchants, and that a warranty of a "reasonable period of time" is twelve months. In addition, in all circumstances regarding warranties, ignore any particularities of applicable law and assume that the UCC default provisions control. The reader may find it useful to refer to the accompanying figures throughout this discussion.

A. Materially Different Term

Buyer sends a purchase order for widgets to Seller. Buyer's purchase order has boilerplate giving it a warranty of twenty-four months, but there is no clause stating it will only contract on its own terms. Seller sends a sales acknowledgement with identical terms and boilerplate as Buyer's, except that Seller's warranty clause is of twenty-two months' duration. Seller then ships the widgets and Buyer receives, pays for, and uses the widgets. X months later the widgets fail. Buyer wants to know if its widgets are under warranty.

1. California

The writings of the parties agree on all terms except for the length of warranty. Under Section 2-207(1) a contract is formed. The parties should then look to Section 2-207(2) to determine the terms of the contract. [page 273]

The additional terms in the acceptance (Seller's form) are considered proposals for addition to the contract,[113] but the Code is silent as to how different terms should be treated. Since Buyer's form also has a warranty clause, Seller's warranty term is different instead of additional.

Under California law,[114] different terms are treated exactly the same as additional terms for the purpose of applying Section 2-207(2). As both parties are merchants, and neither party objected, nor expressly conditioned its offer/acceptance upon assent to its own terms, the inquiry is focused on whether Seller's term of a twenty-two month warranty would materially alter a contract based upon Buyer's (offeror's) term of a twenty-four month warranty.[115]

It is submitted that reasonable people could disagree over whether a two-month reduction in warranty is a material alteration. If the court finds the alteration to be material, it will refuse to import it into the contract, and Buyer's twenty-four month warranty will stand. If deemed immaterial, then it should be incorporated into the contract, and Seller's twenty-two month term will govern.[116]

Either Party's Terms Could Govern

Where X is the time until failure,

If X > 24, Seller wins.
If 22 < X ≤ 24, either party could win, depending on the court's decision to choose a 22- or 24-month warranty.
If X ≤ 22, Buyer wins.

2. New York

Assuming New York continues to tacitly employ the California rule, the outcome will be exactly the same as in California. [page 274]

Either Party's Terms Could Govern

Where X > is the time until failure,

If X > 24, Seller wins.
If 22 < X ≤ 24, either party could win, depending on the court's decision to choose a 22- or 24-month warranty.
If X ≤ 22, Buyer wins.

3. Illinois

A contract is formed under Section 2-207(1) as per the California discussion. Illinois law applies Section 2-207(2) to find the terms of the contract differently than either California or New York.

Illinois follows the majority rule, whereby different terms are not eligible for the possible inclusion treatment that additional terms receive under Section 2-207(2). Instead, different terms trigger the "knock-out" rule, causing both parties' terms to be stricken from the contract and be replaced by the UCC gap fillers (if any).

In our scenario this would mean that both Buyer's twenty-four month warranty and Seller's twenty-two month warranty would be "knocked-out" and replaced by a warranty of a reasonable period.[117] For simplicity, in this hypothetical we can define this period to be G = twelve months, but in reality the time period could be longer or shorter, depending upon the determination of the court. Again, the court should not determine the length of a reasonable warranty period by giving regard to when the product actually failed.[118]

Neither Party's Terms Govern

Where X is the time until failure, and
Where G is the length of a warranty of a reasonable period of time, then,

If X ≤ G, Buyer wins.
If X > G, Seller wins. [page 275]

4. England

Applying England's mirror-image rule gives a "last-shot" result. Seller's "acceptance" (sales acknowledgement) is actually treated as a counter-offer which Buyer then accepted when it received, paid for, and used the widgets. Seller's terms prevail and the warranty is of twenty-two months' duration.

Seller's Terms Govern

Where X is the time until failure, then

If X ≤ 22, Buyer wins.
If X > 22, Seller wins.

5. CISG

In this example, Seller's sales acknowledgement (acceptance) was not the mirror-image of Buyer's purchase order (offer). This automatically converts Seller's acceptance into a counter-offer,[119] unless the different or additional terms are immaterial and no objections are raised by Buyer.[120]

The variant warranty length in the acceptance would be considered material under the traditional interpretation [121] of CISG Article 19(3), thereby turning Seller's acceptance into a counter-offer that was accepted by Buyer through performance when it received, paid for, and used the widgets. The result is the same as under English law -- the terms in Seller's sales acknowledgement will govern.

Seller's Terms Govern

Where X is the time until failure, then

If X ≤ 22, Buyer wins.
If X > 22, Seller wins.

6. PECL

Because this is a case of conflicting boilerplate, PECL Article 2:209 is the applicable rule for finding the existence of a contract, the terms of which consist of any agreed terms, along with the boilerplate terms common to both parties. In this scenario, the variant term is the warranty -- twenty-two months in Seller's form, as opposed to twenty-four months in Buyer's form. [page 276] Thus, the warranty provision "knocks-out" [122] and we turn to the default provisions of the governing jurisdiction to fill the gap. In this example, we assume the UCC fills the gap,[123] and we substitute its provision of a warranty for a reasonable time.[124]

Neither Party's Terms Govern

When X is the time until failure, and
When G is the length of a warranty of a reasonable period of time, then,

If X ≤ G, Buyer wins.
If X > G, Seller wins.

7. PICC

Because this is a case of conflicting boilerplate, we apply Article 2.22 as the applicable rule for finding the existence of a contract, the terms of which consist of any agreed terms, along with the boilerplate terms common to both parties. In this contrived scenario, the only difference is the length of the warranty: twenty-two months versus twenty-four months; therefore, the warranty provision drops out [125] and the court turns to the default provisions of the governing jurisdiction to fill the gap. In this example, assume the UCC fills the gap [126] and substitutes its provision of a warranty for a "reasonable time."[127] [page 277]

Neither Party's Terms Govern

When X is the time until failure, and
When G is the length of a warranty of a reasonable period of time, then,

If X ≤ G, Buyer wins.
If X > G, Seller wins.

B. Materially Different Term; Both Parties Require Own Terms

Buyer and Seller both have forms with boilerplate clauses stating they will contract only upon their own terms. Buyer sends Seller its purchase order for widgets, which includes in its boilerplate a clause granting Buyer a warranty of unlimited duration. Seller sends its sales acknowledgement for the widgets to Buyer, but its boilerplate includes a clause disclaiming every type of warranty. Seller ships the widgets, and Buyer accepts, pays for, and uses the widgets. Four months later a widget fails. Buyer would like to know if the widget is under warranty.

1. Illinois

In this example, both parties' forms expressly limit acceptance to their own terms. The writings alone are not sufficient to establish a contract, but their conduct indicates the existence of a contract, as per Section 2-207(3). The contract will consist of those terms upon which both forms agree, along with any supplementary terms of the UCC As the parties' forms do not agree on the crucial term of warranty, pursuant to Section 2-207(3), the court will "knock-out" both parties' terms on this issue, and look to fill the void with the supplementary terms of the UCC

Buyer will not get its preferred warranty of unlimited duration, and Seller will not avoid all liability. The UCC is the appropriate source for determining whether a warranty of "a reasonable [period of] time" will be imported into the contract.[128] Since a reasonable period of time for a warranty was previously defined as twelve months, and because the widget failure occurred during this period (in month four), the court would likely find that the default warranty applies. [page 278]

Neither Party's Terms Govern

Where X is the time until failure, and
Where G is the length of a warranty of a reasonable period of time, then,

If X ≤ G, Buyer wins.
If X > G, Seller wins.

In this case, X = 4 months and G = 12 months.

Buyer wins.

2. California and New York

California and New York follow the same analysis and result as under Illinois law.

Neither Party's Terms Govern

Buyer wins as above.

3. England

Because Seller's sales acknowledgement (acceptance) was not the mirror-image of Buyer's purchase order (offer), the sales acknowledgement acted as a counter-offer, which was then accepted by Buyer when it received, paid for, and used the widgets. The terms of sale are those of Seller's sales acknowledgement. Thus, under English law, which adheres to the "last-shot" rule, Seller would successfully avoid liability.

Seller's Terms Govern

Seller wins.

4. CISG

Seller's sales acknowledgement (acceptance) was not the mirror-image of Buyer's purchase order (offer). This automatically converts the acceptance into a counter-offer,[129] unless the different or additional terms are immaterial and no objections are raised by Buyer.[130] Under the traditional interpretation, the variant terms would be considered material [131] under CISG Article 19(3), turning Seller's acceptance into a counter-offer that was then accepted by Buyer when it received, paid for, and used the widgets. The [page 279] result is the same as under English law -- the terms in Seller's sales acknowledgement will govern.

Seller's Terms Govern

Seller wins.

5. PECL

Because this is a case of conflicting boilerplate, PECL Article 2:209 is the applicable rule for finding the existence of a contract whose terms consist of any agreed terms along with the boilerplate terms common to both parties. In this scenario, the warranty terms clearly conflict -- a perpetual warranty versus no warranty at all -- so both warranty provisions "knock-out," and the default provisions of the governing jurisdiction fill the gap. In this example, assume that the UCC fills the gap,[132] and substitute its default provision of a warranty for a "reasonable time."[133]

Neither Party's Terms Govern

Where X is the time until failure, and
Where G is the length of a warranty of a reasonable period of time, then,

If X ≤ G, Buyer wins.
If X > G, Seller wins.

In this case, X = 4 months and G = 12 months.

Buyer wins.

6. PICC

Because this is a case of conflicting boilerplate, we apply Article 2.22 as the applicable rule for finding the existence of a contract, the terms of which consist of any agreed terms, along with the boilerplate terms common to both parties. In this scenario, the warranty terms clearly conflict -- a perpetual warranty versus no warranty at all -- so both warranty provisions "knock-out," and the default provisions of the governing jurisdiction fill the gap. In this example, assume the UCC fills the gap,[134] and substitutes its default provision of a warranty for a "reasonable time."[135] [page 280]

Neither Party's Terms Govern

Where X is the time until failure, and
Where G is the length of a warranty of a reasonable period of time, then,

If X ≤ G, Buyer wins.
If X > G, Seller wins.

In this case, X = 4 months and G = 12 months.

Buyer wins.

C. Immaterially Different Terms; "Front-Form" Conflict; Reneging

Buyer and Seller exchange a purchase order and sales acknowledgement forms for the sale of a bulk commodity. Both forms are identical, except that Buyer's form calls for 100 tons "new bags" and Seller's form specifies 100 tons "safe bags,"[136] and neither form was expressly made conditional on assent to its own terms. It is stipulated that this is a "front-form" conflict, and that these are immaterially "different" terms. Before delivery, but after the deal is concluded, the price rises dramatically. Seller would like out of the deal; Buyer would like delivery at the original price.

1. Illinois

The exchange of forms and the conclusion of the deal would probably indicate a definite and seasonable acceptance. Under UCC Section 2-207(1), this is enough to find the existence of a contract. Under Illinois law, "different" terms are ineligible for the Section 2-207(2) inclusion consideration, and will instead trigger the "knock-out" rule, whereby, the terms will be removed from both sets of forms, and a default "gap-filler" will be substituted in by the court. In this case, Seller will not be able to back out of the (now less profitable) deal, and Buyer will receive the goods at the original price.

Court Supplies Terms

Neither Party Can Renege. Buyer Wins.

2. California

A contract is formed as per the Illinois discussion; however, the terms of the contract will be different under California law. California has rejected the Illinois and majority rule treatment of knocking-out "different" terms and [page 281] instead, treats "different" terms the same as "additional" terms. In this case, the court subjects the terms to the Section 2-207(2) analysis.

It was stipulated that the "new bags" versus "safe bags" discrepancy was an immaterial difference. Thus, Seller's "safe bags" term will be included in the contract unless Buyer objects.[137] As under Illinois law, after formation of the contract under Section 2-207(1), Seller is unable to back out of the deal, and Buyer will receive the goods at the original price. However, under California law Buyer can choose whether to incorporate Seller's different term via Section 2-207(2)(c). But in this example, Buyer is indifferent as to "new" or "safe" bags, and is only concerned with receiving the goods at the original price. Thus, Buyer does not object and Seller can deliver in "safe" bags.

Offeror (Buyer) Chooses the Term

Neither Party Can Renege. Buyer Wins.

3. New York

It is anticipated that New York law would tacitly accept the California approach of treating "different" terms in the same manner as "additional" terms. In this case, the outcome would be identical under New York and California law.

Offeror (Buyer) Chooses the Term

Neither Party Can Renege. Buyer Wins.

4. England

As England adheres to the mirror-image rule and "last-shot" doctrine, either Seller or Buyer could point to the variant terms in the offer and acceptance to back out of the deal. In this example, Seller can object to the different term and prevent the formation of a contract; effectively reneging on the deal.

If Seller had shipped the goods and Buyer had already accepted them, then the "last-shot" rule would apply and Buyer's acceptance of the goods would be taken as assent to Seller's terms.

Either No Contract or Seller's Terms Govern

Either Party Can Renege. Seller Wins. [page 282]

5. CISG

Though the CISG follows the English mirror-image and "last-shot" rules, it softens their impact by allowing a contract to form on the basis of differing terms, so long as the differences are not material and the offeror does not object. Thus, the default is that the different term ("safe bag") contained in Seller's sales acknowledgement acts as a rejection of Buyer's offer and constitutes a counter-offer which could then be accepted via performance. However, as it was stipulated, the difference between "safe bags" and "new bags" is immaterial, and as CISG Article 19(3) does not deem this difference material, Seller's different terms will be included and a contract will form unless Offeror (Buyer) objects.[138]

In contrast to English law, under CISG Article 19(2), only Offeror has the power to prevent the formation of the contract. In our example, Buyer's purchase order is the offer, and Buyer wishes to see the contract concluded, so Buyer will not object to Seller's "safe bags" term, and thus the "terms of the contract are the terms of the offer with the modifications contained in the acceptance."[139]

Offeree's (Seller's) Terms Govern

Offeror Can Renege. Offeror (Buyer) Wins.

6. PECL

The PECL treats conflicting boilerplate terms under PECL Article 2:209, whereas the more general PECL Article 2:208 is employed to analyze conflicts not arising from boilerplate -- so called "front-form" conflicts. In this example, it is stipulated that the divergent "safe bags" versus "new bags" terms are not the result of conflicting boilerplate clauses, but rather an instance of a "front-form" conflict, or a "modified acceptance."

Applying PECL Article 2:208(1), the divergent "safe bags" term in Seller's sales acknowledgement acts as a rejection of Buyer's offer and constitutes a new offer. However, just as under the CISG, the PECL will still allow a contact to form even with immaterial variations in the acceptance and will automatically include the immaterially variant terms into the bargain.[140] As with the CISG, Offeror (the Buyer in this case) has the right to prevent the formation of the contract if it objects to the Offeree's (Seller's) variant term.[141] In this example, it is Seller (Offeree) who would like to prevent contract formation, but there is no corresponding rejection right for offerees. Buyer [page 283] will not object, so Seller's immaterially different term becomes a part of the contract. Seller is now obligated to deliver at the original price. This is the same result as under the CISG.

Offeree's (Seller's) Terms Govern

Offeror Can Renege. Offeror (Buyer) Wins.

7. PICC

As does the PECL, the PICC applies different analyses to conflicts of terms depending on where those conflicts arise. Boilerplate conflicts are treated under PICC Article 2.22, whereas all other modified acceptances or "front-form" conflicts are dealt with by PICC Article 2.11. As under the PECL and CISG, a modified acceptance is deemed to be a rejection and counter-offer,[142] unless the variance is immaterial, in which case the acceptance will be valid unless the offeror objects without undue delay.[143] If the offeror fails to object, then the prevailing terms of the contract will be those in the offer along with the modifications contained in the acceptance.[144]

In our example, Buyer retains the right to reject Seller's (Offeree's) variant term, and prevent the formation of the contract. As under the PECL and CISG, Offeror has no such corresponding right. In this case, Buyer wishes to conclude the contract at the original price, so it will not object to Seller's term. Seller is obligated to deliver at the original price, but may do so under its "safe bags" term.

Offeree's (Seller's) Terms Govern

Offeror Can Renege. Offeror (Buyer) Wins.

D. Effect of Battling CISG Opt-Out Clauses

Assume Buyer and Seller are in different countries and both signatories to the CISG. Buyer sends its purchase order to Seller, who then sends its own sales acknowledgement back to Buyer. Performance then follows. In this example, assume that the transaction meets all the jurisdictional requirements for the CISG to apply, and that the two parties' forms are identical, except that Buyer's purchase order contains a CISG opt-out clause, whereas Seller's form is silent.

Qualifying international sales transactions will automatically invoke the application of the CISG, unless its application is specifically opted out as [page 284] provided for in CISG Article 6.[145] Therefore, it is necessary to begin the analysis under the CISG, and then move beyond the CISG once it becomes inapplicable.

When only one party's form has an opt-out clause (as is the case in this example), it is not clear that both parties have agreed to opt-out of the CISG, as called for under Article 6. Seller's silence may indicate a desire to rely upon the applicable "default rules" of the transaction -- in this case the CISG.[146]

Here, it would appear that Buyer's opt-out clause conflicts with Seller's (implied) desire for the default treatment (or, in other words, Seller's desire to not opt-out of the CISG). As we do not have both parties' agreement under CISG Article 6 to opt-out, the CISG continues to apply.

However, the conflict in terms (conflicting opt-out clauses) has other consequences. Having failed to reach agreement on whether to opt-out of the CISG, the parties thereby trigger a battle of the forms scenario as discussed above. Under the traditional approach, any material deviation in acceptance (the Seller's form) will function as a rejection of the offer (the Buyer's form) and will constitute a counter-offer, which could then be accepted through performance.[147]

Through application of the traditional CISG battle of the forms analysis, the conflicting opt-out clauses ultimately create the (now familiar) situation whereby the last-shot's terms govern the contract. In this example, Seller's form was the last to change hands before performance ensued, and thus Seller's ("last-shot") terms govern and the CISG applies.[148]

In fact, under the traditional interpretation of the CISG, the last-shot (in this case Seller's form) will always get to choose whether the CISG will apply to the transaction. If Seller wishes the CISG to apply, it may merely remain silent on the issue of opting-out, and as its terms are adopted in toto, the CISG will automatically apply.[149] Likewise, if Seller would like to opt-out of the CISG, it could merely insert such a clause into the contract, which would be deemed accepted once performance ensues. [page 285]

Allowing the "last-shot" to determine for both parties whether the transaction will be subject to the CISG seems contrary to the spirit of Article 6 (requiring the agreement of both parties to effect an opt-out), but the requisite agreement may be found through the implied acceptance of the last-shot's terms through performance of the contract.

How then can a party -- especially a buyer (offeror) -- ensure that the CISG will not apply in an otherwise applicable transaction?[150] The short answer is that it cannot, at least not unless it fires the "last-shot" or manages to prevent the automatic application of the CISG.[151] Where a party is concerned that it may not be in a position to always fire the "last-shot," it may attempt to structure the transaction so as to run afoul of the CISG's jurisdictional requirements,[152] thereby preventing its automatic application ab initio.

Although it may seem like a tail-wagging-the-dog scenario, the destruction of the CISG's jurisdiction [153] provides a more robust method of ensuring the non-application of the CISG, especially for buyers who are not often in the position of having their opt-out clauses given effect. That said, one must be extremely careful to consider what (if any) laws will govern the contract in the absence of the CISG, making certain that in the zeal to ensure the non-application of the CISG, one does not end up doing more harm than good.


FOOTNOTES

* Associate in the Washington, D.C. office of Wilmer Cutler Pickering Hale and Dorr, LLP; J.D., Columbia University; LL.M., King's College London. Special thanks to Professors Albert Kritzer and Victor Goldberg for their comments and advice, without which this Article would not have been possible. I am grateful for the helpful comments and suggestions of Professors Michael Joachim Bonell, Loukas Mistelis, Paul Mitchell, and Marco Torcello, as well as Alexander Collins, Dr. Michael Raninger, R. Gregory Capaldini, Jill Cooper, and Ralph Stemp. All errors, of course, remain my own.

1. The text of UCC Section 2-207 may be found online. See UCC § 2-207 (2002), available at <http://www.law.cornell.edu/ucc/ucc2-207.text.html>. There are inconsequential variances between the language of the Illinois, California, and New York enactments. The differing outcomes in each jurisdiction are due to the divergent approaches employed by the courts of each state.

2. See John E. Murray, Jr., The Definitive "Battle of the Forms": Chaos Revisited, 20 J.L. & Com. 1, 41 (2000).

3. The 2003 amendments to UCC Article 2 would substantially revise Section 2-207, but have yet to be adopted by any jurisdiction.

4. See Murray, supra note 2, at 49 n.19.

5. Indeed, under Section 2-207 it is difficult to make a common law rejection and counter-offer. Only acceptances that state different "dickered terms" will likely suffice.

6. Commentators believe that the UCC's default provisions are buyer-friendly. See Murray, supra note 2, at 29.

7. Giesela Rühl, The Battle of the Forms: Comparative and Economic Observations, 24 U. Pa. J. Int'l Econ. L. 189, 218 n. 104 (2003).

8. "Different" terms are those that expressly conflict (e.g., buyer's form indicates a warranty of twelve months and seller's form indicates no warranty whatsoever).

9. As long as the acceptance is not "expressly made conditional on assent to the additional or different terms." UCC § 2-207(1).

10. This is the view taken by the Supreme Court of California. See discussion infra Part II.C.

11. This is Professor Summers's view, and has come to be known as the "leading minority" view. However, it has been criticized as turning the common law "last-shot" rule into a "first-shot" rule, as it allows the offeror's terms to prevail over any subsequent terms in the acceptance. See Northrop Corp. v. Litronic Indus., 29 F.3d 1173, 1178-79 (7th Cir. 1994).

12. This is the view first proposed by Professor Goldberg. See Victor P. Goldberg, The "Battle of the Forms": Fairness, Efficiency, and the Best-Shot Rule, 76 Or. L. Rev. 155, 166 (1997). This view was subsequently adopted and modified by Giesela Rühl. See Rühl, supra note 7, at 221 n. 111.

13. This may make it more difficult for sellers to contract out of warranties or liability if buyers can always benefit from the UCC default protections by deliberately including a conflicting term.

14. Professor White admits that while there is no provision mandating or preferring the "knock-out" treatment, "it does not bar it either." See James White & Robert Summers, Uniform Commercial Code 34 (5th ed. 2000).

15. Id.

16. See Allan Farnsworth, Contracts 170 (3d ed. 1999).

17. UCC Section 1-102(1) (2002) states: "This Act shall be liberally construed and applied to promote its underlying purposes and policies."

18. See Goldberg, supra note 12, at 156. To help determine "fairness," the court may resort to comparing the standard terms in both the buying and selling forms used by each party. This has been dubbed the Golden Rule: "Do unto others as you would have them do unto you." Id.

19. Id.

20. Neutral terms are presumed less likely to conflict, or in the event of a conflict, to do so to a lesser degree.

21. See Goldberg, supra note 12, at 162.

22. Id. at 166. A party could include such important terms as a limitation of warranty, but it would have to omit other terms to achieve an end result that is balanced. Id.

23. Professor Goldberg admits that, "[o]perationalizing fairness will not be easy." Id. at 167.

24. See discussion infra Part II.C.

25. But even this is contentious. Does silence on an issue (e.g., a warranty of merchantability) imply that no warranty is wanted, or that the party seeks to rely upon the UCC default rules, which include the warranty?

26. If the buyer's form seeks a warranty of twenty-four months and the seller's form provides a warranty of twenty-two months, what is the proper characterization of the conflict? "Different?" "Additional?" Both? Perhaps the parties are in agreement as to a warranty of twenty-two months' duration, with buyer seeking to impose an additional clause granting a two-month warranty extension?

27. Northrop Corp. v. Litronic Indus., 29 F.3d 1173 (7th Cir. 1994).

28. Id. at 1175.

29. Id.

30. Id. at 1175-76. This is a gross simplification of what actually occurred, but for the purposes of our analysis (and the decision) the intricate factual details surrounding the offer and acceptance have the same result as summarized. See id. at 1179.

31. Northrop Corp. v. Litronic Indus., 29 F.3d at 1176.

32. Id.

33. Id. at 1178.

34. Id.

35. Id.

36. Northrop Corp. v. Litronic Indus., 29 F.3d at 1179.

37. Id. at 1178.

38. Id.

39. Id. Indeed, this has since become the law of Illinois. See Cloud Corp. v. Hasbro, Inc., 314 F.3d 289, 295 (7th Cir. 2002) (citing William B. Davenport et al., Uniform Commercial Code with Illinois Code Comments § 5/2-207, in Illinois Code Comment 11, 126-27 (1997) ("[T]he majority rule, and the rule in Illinois, is that the inconsistent terms cancel each other out and the court fills the resulting void with a term of its own devising.")).

40. Northrop Corp. v. Litronic Corp., 29 F.3d at 1179.

41. Id.

42. Steiner v. Mobil Oil Corp., 569 P.2d 751 (Cal. 1977).

43. Id. at 754.

44. Id. at 754-55.

45. Id. at 755.

46. Id. at 758 (citing UCC § 2-207(1)).

47. Steiner, 569 P.2d at 759 n. 5.

48. Id.

49. Judge Posner wrote, "Our own preferred view -- the view that assimilates 'different' to 'additional,' so that the terms in the offer prevail over the different terms in the acceptance only if the latter are materially different, has as yet been adopted by only one state, California." Northrop Corp. v. Litronic Indus., 29 F.3d at 1178.

50. The New Mexico Supreme Court considered the appropriate interpretation of Section 2-207, and rejected California's assimilation of "different" to "additional," preferring instead to stick with the majority "knock-out" approach. Gardber Zemke Co. v. Dunham Bush, Inc., 850 P.2d 319 (N.M. 1993).

51. The one New York Court of Appeals case that does discuss Section 2-207 does not help illuminate NewYork's position on the "additional" versus "different" controversy. See Marlene Indus. Corp. v. Carnac Textiles, Inc., 380 N.E.2d 239 (N.Y. 1978).

52. See N.Y. UCC § 2-207 annot. 2 (2004).

53. Italfabrics, Ltd. v. Jay Jacobs, Inc., No. 88 Civ. 6239, 1990 U.S. Dist. Lexis 3643 (S.D.N.Y. 1990). Accord Aktiengensellschaft v. Societa Industriale, 471 F.Supp. 1163, 1170-71 n.8 (S.D.N.Y. 1979) (applying New York law to treat a "different" term under the Section 2-207 "additional" analysis); Daisy Indus., Inc. v. Kmart Corp., No. 94 Civ. 4211, 1999 WL 1043964 (S.D.N.Y. 1999) (applying Section 2-207(2) to variant terms which were clearly "different").

54. And also in the United States for contracts governed by the United Nations Convention on Contracts for the International Sale of Goods (CISG).

55. The Principles of European Contract Law (PECL) was first published in 1995, and the UNIDROIT Principles of International Commercial Contracts (PICC) was promulgated in 1994; whereas, the "traditional" legal approach is based upon much older law. The main English case of Butler Mach. Tool Co. Ltd. v. Ex-Cell-O Corp. (England) Ltd., [1979] 1 All E.R. 965, 1 W.L.R. 401, purports to follow Hyde v. Wrench, (1840) 3 Beav. 334 (Eng.). The CISG was adopted in 1980, and UCC Section 2-207 had achieved widespread use by 1962.

56. Compare UCC Section 2-207 discussion, supra Part II.A, where boilerplate conflicts are analyzed under the "knock-out" rule only if: (a) the contract is formed via course of conduct under Section 2-207(3), or (b) the conflict is over a "different" term and the parties are in a "majority view" state. Accord with the "best-shot" discussion, supra Part II.A.3, which applies to all conflicts -- irrespective of materiality, or the "additional" versus "different" distinction.

57. 1 All E.R. at 965.

58. The House of Lords is the highest judicial institution in the United Kingdom; the Court of Appeal is the next highest court and its decisions are binding upon all other (lower) courts throughout England and Wales, and are persuasive in Scotland.

59. The title MR refers to "Master of the Rolls" which is the equivalent to the Chief Justice in the United States.

60. Butler Mach. Tool, 1 All E.R. at 967.

61. Id. at 968.

62. Id.

63. Id.

64. Id. Compare to Section 2-207(2) whereby when met with silence, certain non-material, "additional" terms can be automatically incorporated into contracts between merchants.

65. Butler Mach. Tool, 1 All E.R. at 968. Cf. UCC § 2-207(2)(b).

66. Butler Mach. Tool, 1 All E.R. at 968.

67. Id. Compare to Section 2-207(3) and the "knock-out" treatment of replacing additional and different terms with "neutral" UCC gap fillers. See also, Rawlings, The Battle of the Forms, 42 M.L.R. 175, 719 (1979).

68. Butler Mach. Tool, 1 All E.R. at 968.

69. Id. at 969. Although Butler was decided in 1977, the rule proclaimed by Lawton LJ and Bridge LJ has been the law in England for approximately 158 years.

70. See Trollope & Colls Ltd. v. Atomic Power Constr. Ltd., [1962] All E.R. 1035; Buchanan t/a Warnocks v. Brook Walker & Co. Ltd., [1988] N.Ir.L.R. 116 (refusing to follow Lord Denning MR's approach and holding to the traditional analysis); Sauter Automation Ltd. v. Goodman, [1986] 34 Build L.R. 81 (following Lawton LJ's approach). Scotland also abides the "last-shot" rule. See Rutterford Ltd. v. Allied Breweries Ltd., 1990 S.L.T. 249, 1990 Sc.L.R. 186, available at 1989 WL 984342 (noting that Butler is still the law in England and applying Wolf v. Forfar Potato Co., 1984 S.L.T. 100, available at 1983 WL 217320 to the same effect); Uniroyal Ltd. v. Miller & Co. Ltd., 1985 S.L.T. 101, available at 1982 WL 222847 (applying Butler).

71. United Nations Convention on Contracts for the International Sale of Goods (CISG), U.N. Doc. A/CONF. 97/18 (Apr. 11, 1980). See also 19 I.L.M. 668 (1980); 62 Fed. Reg. 6262 (Mar. 2, 1987), available at <http://www.uncitral.org/uncitral/en/uncitral_texts/sale_goods.html>.

72. See Maria del Pilar Perales Viscasillas, "Battle of the Forms" Under the 1980 United Nations Convention on Contracts for the International Sale of Goods: A Comparison with Section 2-207 UCC and the UNIDROIT Principles, 10 Pace Int'l L. Rev. 97 (1998); see also U.N. Comm'n on Int'l Trade Law, Status of Texts, <http://www.uncitral.org/uncitral/en/uncitral_texts/sale_goods.html> (follow "1980-United Nations Convention on Contracts for the International Sale of Goods" hyperlink; then follow "Status" hyperlink).

73. Peter Winship, Domesticating International Commercial Law: Revising U.C.C. Article 2 in Light of the United Nations Sales Convention, 37 Loy. L. Rev. 43 (1991); see also CISG ch. 1, arts. 1-6. For information on CISG opt-outs (including model clauses) see Brett W. Smith, Your Sale of Goods? The Law Applied May Not be What You Expect, Wash. State Bar News, Apr. 2004, available at <http://www.wsba.org/media/publications/barnews/2004/apr-04-smith.htm>.

74. See Murray, supra note 2, at 42.

75. See Maria del Pilar Perales Viscasillas, Battle of the Forms and the Burden of Proof: An Analysis of BGH 9 January 2002, 6 Vindobona J. Int'l Comm. L. & Arb. 217 (2002), available at <http://www.cisg.law.pace.edu/cisg/biblio/perales2.html> (explaining the most common interpretations of CISG Article 19 to battle of the forms cases: application of national law, application of general principles upon which the CISG is based, and the "traditional" approach of applying the "last-shot" treatment). For cases recognizing the "last-shot" approach, see Filanto v. Chilewich Int'l, 789 F. Supp. 1229, 1238 (S.D.N.Y. 1992), Fujitsu Elektronik v. Fauba France Co., Cass. 1e civ., Jan. 4, 1995, (Fr.), available at <http://cisgw3.law.pace.edu/cases/950104f1.html>; Les Verreries de Saint-Gobain v. Martinswerk, Cass. 1e civ., July 16, 1998, (Fr.), available at <http://cisgw3.law.pace.edu/cases/980716f1.html>; Magellan v. Salzgitter, 76 F. Supp. 2d 919, 925 (N.D.Ill. 1999).

76. For an English language synopsis and analysis see Bundesgerichtof [BGH][Federal Court of Justice], Jan. 9, 2002, VIII ZR 304/00 (F.R.G.), available at <http://cisgw3.law.pace.edu/cases/020109g1.html>. [hereinafter VIII ZR 304/00]

77. Id.

78. Id.

79. Id.

80. It is unusual to see a buyer's clause that limits recovery to the purchase price of the goods -- usually one expects to see such a clause in seller's forms.

81. See VIII ZR 304/00, supra note 76.

82. Id.

83. Id. See also Larry A. DiMatteo et al., The Interpretive Turn in International Sales Law: An Analysis of Fifteen Years of CISG Jurisprudence, 24 Nw. J. Int'l L. & Bus. 299, 353 (2004).

84. Id.

85. See VIII ZR 304/00, supra note 76, ("Despite some opaque arguments and sentences, the core message of the Supreme Court of Germany is clear: Conflicting standard forms are entirely invalid and are replaced by CISG provisions, while the contract as such stays valId."). See also del Pilar Perales Viscasillas, supra note 75 (opining that the Court was likely influenced in its reasoning by both German national non-uniform law and the position of German commentators on the uniform law).

86. Access to foreign cases and arbitrations interpreting and applying CISG Article 19 are compiled by the Pace Law School CISG Database, <http://www.cisg.law.pace.edu/cisg/text/anno-art-19.html. For a catalog of recent diverging CISG case law, see DiMatteo et al., supra note 83.

87. UNIDROIT Principles of International Commercial Contracts (1994), 34 I.L.M. 1067 (1995), available at <http://www.unidroit.org/english/principles/contracts/principles1994/fulltext.pdf> [hereinafter PICC].

88. Id. at foreward, pmbl.

89. See Murray, supra note 2, at 43.

90. Id. Note how the PICC Articles 2.11(1) and (2) track CISG Article 19(1) and (2) almost verbatim. Also recall that unlike the English rule, the CISG (and thus PICC) will still allow a contract to form with immaterial variations in the acceptance. See also PICC art.2.11, para. 2 ("What amounts to a 'material' modification cannot be determined in the abstract but will depend on the circumstances of each case.").

91. See del Pilar Perales Viscasillas, supra note 72, at 119.

92. Modified acceptances become counter-offers unless the modifications are immaterial.

93. See generally Comm'n on European Contract Law, The Principles of European Contract Law (1999), available at <http://frontpage.cbs.dk/law/commission_on_european_contract_law/index.html>.

94. Id.

95. See Henry D. Gabriel, Introduction to the Special Issue on the Comparison of the Principles of European Contract Law with the Uniform Commercial Code, 13 Pace Int'l L. Rev. 257, 259 (2001).

96. See Goldberg, supra note 12, at 158 (criticizing this bifurcation approach as resulting in additional litigation over whether particular conflicts should be treated under the boilerplate procedure of PECL Article 2:209, or under the "front-form" analysis of PECL Article 2:208). The PECL attempts to reduce this possibility by defining what is meant by "General Conditions." See PECL art. 2:209(3). Compare this with the PICC where there is no such definition.

97. Boilerplate is used synonymously with the term general conditions. The PECL defines general conditions as "terms which have been formulated in advance for an indefinite number of contracts of a certain nature, and which have not been individually negotiated between the parties." PECL art. 2:209(3).

98. Id. art. 2:209(1).

99. Id. art. 2:209(2)(b). The PECL provides no guidance as to how to derive the terms of the contract where there has been performance with subsequent objection under PECL art. 2:209(2). Accord PICC.

100. PECL art. 2:209(2)(a).

101. See Rühl, supra note 7, at 209.

102. Accord PICC, (addressing the provision governing gap-filling).

103. See supra Part III.C.

104. See Douglas Baird & Robert Weisberg, Rules, Standards and the Battle of the Forms: A Reassessment of §2-207, 68 Va. L. Rev. 1217, 1249 n.80 (1982) (citing James White & Robert Summers, Handbook of the Law Under the Uniform Commercial Code §1-2, 31 (2d ed. 1980)).

105. PECL art. 2:208(1)-(2).

106. Id. art. 2:208(2).

107. Id. art. 2:208(3)(b).

108. Id. art. 2:208(3)(a), (c).

109. Id. art. 2:208(3).

110. Accord CISG art. 19(1); PICC Art. 2.11(1) (both provisions deem the offer rejected and treat the "acceptance" as a counter-offer).

111. Cf. English law where the "last-shot" rule is triggered by all conflicts in terms, no matter where the conflict arises ("front-form" or boilerplate) and no matter how immaterial.

112. Query whether the offeror needs protection from its protection.

113. UCC § 2-207(2) (2002).

114. Recall that California is the only state that clearly equates "different" to "additional" under Section 2-207(2). See supra note 49 and accompanying text.

115. UCC § 2-207(2)(b) (2002).

116. The court should not first determine whether the length of warranty is outcome determinative, and reason that the warranty must therefore be "material," so that it should be excised ab initio. Materiality would then turn upon when the product failure occurred and not upon the terms themselves -- a gross distortion of the Section 2-207(2)(b) analysis. The proper analysis is to examine the materiality of the term ex ante at the time the contract is being formed and without regard to what may have happened after formation.

117. The UCC provides that in the absence of a specific time provision, a "reasonable [period of] time" shall be used. UCC § 2-309(a). UCC Section 2-314 and UCC Section 2-315 contain the default warranties of merchantability and fitness for a particular purpose, respectively. See also Northrop Corp. v. Litronic Indus., 29 F.3d 1173, 1178 (7th Cir. 1994) (where Judge Posner applied UCC Section 2-309(a) in a "knock-out" situation to import a warranty of a "reasonable period" into the contract).

118. See supra note 116 (discussing preference for ex ante analysis).

119. See CISG art. 19(1).

120. See id. art. 19(2).

121. However, some jurisdictions interpret CISG Article 19(3) "materiality" in conjunction with CISG Article 9 "trade usage and custom" to allow terms which, upon a reading of CISG Article 19(3) alone, would act as a rejection and counter-offer.

122. Or does it? A case can be made that a warranty of twenty-four months encompasses a warranty of twenty-two months. Alternatively, it could be thought of as a warranty of twenty-two months, plus a two-month warranty extension. Thus, one could argue that a twenty-two month warranty is a term common to both parties and should be included as per PECL Article 2.22. It is submitted that when faced with just such a situation, the court would bend over backward to find "agreement" between the parties, rather than have to apply the more divergent, at least in this case, UCC default provision (deemed to be a twelve-month warranty throughout these examples).

123. The choice of gap fillers will vary depending upon which jurisdiction governs.

124. See UCC § 2-309(a).

125. See supra note 122.

126. See UCC § 2-309(a).

127. See id.

128. Id.

129. See CISG art. 19(1).

130. See id. art. 19(2).

131. See supra note 121.

132. See supra note 123.

133. See UCC § 2-309(a).

134. See supra note 123.

135. See UCC § 2-309(a).

136. This "immaterially different" example was adapted from the analysis of del Pilar Perales Viscasillas. See Maria del Pilar Perales Viscasillas, supra note 72, at 149.

137. See UCC § 2-207(2)(c).

138. CISG art. 19(2).

139. Id.

140. PECL art. 2:208(2).

141. Id. art. 2:208(3)(b).

142. PICC art. 2.11(1).

143. Id. art. 2.11(2).

144. Id.

145. CISG art. 6. "The parties may exclude the application of this Convention or, subject to Article 12, derogate from or vary the effect of any of its provisions." Id.

146. See id. art. 9. A court might, when faced with this situation, look to trade usage and custom (CISG Article 9) to imply agreement from one party's silence.

147. See art. 19. This presumes that an opt-out clause would trigger the "material alteration" provisions of CISG Article 19. As a term directly impacting the "settlement of disputes" it would probably trigger CISG Article 19(3).

148. This would be the case under a traditional application of the CISG; however, not all courts follow the traditional rule. See discussion supra Part III.B.

149. Although unnecessary, Seller can reinforce and clarify its desire for the CISG to apply by an explicit contract provision.

150. That is, how can a buyer/offeror assure itself that the CISG will not apply (in an otherwise applicable transaction), no matter what terms the seller/counter-offeror includes in its forms?

151. Assume that the parties' forms will conflict. If the parties could both agree to a master contract, or to exclude application of the CISG, or to apply the law of a non-CISG jurisdiction, this problem disappears. See Ajax Tool Works v. Can-Eng Mfg., 2003 U.S. Dist. LEXIS 1306, at *8 (N.D.Ill. 2003).

152. See CISG arts. 1-5.

153. The various ways to destroy the CISG's application fall outside the scope of this Article. However, in some circumstances, it may be enough for a party to contract through an affiliate located in a foreign, non-contracting state.


Pace Law School Institute of International Commercial Law - Last updated January 30, 2008
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