Allied Steel & Conveyors, Inc. v. Ford Motor Co.

United States Court of Appeals for the Sixth Circuit · 1960 · Contracts

Contractsacceptanceunilateral contractperformanceindemnity clauseacceptance by performancesuggested vs exclusive mode of acceptancepart performance

Facts

Ford's original 1955 purchase order to Allied included a narrower liability provision and attached Form 3618, but the broad indemnity language in that form was marked "VOID." In July 1956 Ford sent Amendment No. 2 for additional machinery and installation by Allied; the attached Form 3618 was not voided and required Allied to assume responsibility for negligence of both Allied's and Ford's employees arising out of or in connection with Allied's work, while also stating the purchase order agreement was not binding until accepted and that acceptance should be executed on the acknowledgment copy and returned. Allied began installing the machinery on Ford's premises before signing and returning the acknowledgment copy, and on September 5, 1956, Allied employee Hankins was injured through Ford employees' negligence during that installation. Allied did not sign and return the acknowledgment copy until about November 10, 1956, but the amendment was fully performed and paid for.

Issue

Was Amendment No. 2, including its broad indemnity provision requiring Allied to indemnify Ford for Ford's own negligence, binding on September 5, 1956, when Hankins was injured, even though Allied had not yet signed and returned the acknowledgment copy? Also, did the parties intend to void that broad indemnity provision or was the amendment ambiguous so that only the original narrower indemnity term applied?

Rule

An offeror may prescribe an exclusive mode of acceptance, but if the language merely suggests a permitted method rather than requiring an exclusive one, acceptance may be made by other means. Where an offer requests a return promise and the offeree, without making the promise, actually undertakes or tenders the requested performance within the allowable time, a contract arises; acceptance may be implied from acts clearly evincing assent, including part performance. Once accepted, the offer is accepted in its entirety, and a party who had an opportunity to read the contract is bound by its provisions absent fraud or willful deceit.

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Summit Grain Systems, a fabrication company in Toledo, sent Ridgeway Milling in Des Moines a purchase-order amendment for conveyor upgrades. The amendment stated, "This agreement is not binding until accepted. Acceptance should be executed on the acknowledgment copy and returned," and attached a service form containing a broad indemnity clause. Before signing the acknowledgment, Ridgeway began installing the upgrades at Summit's plant with Summit's knowledge and approval.

If an injury connected to the installation occurs before Ridgeway signs and returns the acknowledgment copy, which is the best argument that the indemnity clause is already part of a binding contract?

Explanation. The majority rule is that an offeror may prescribe an exclusive mode of acceptance, but language saying acceptance "should" be executed on an acknowledgment copy is merely suggestive unless the offer clearly makes that method exclusive. When the offeree undertakes the requested performance within the time for acceptance, with the offeror's knowledge, consent, and acquiescence, a binding contract arises and includes all terms of the offer, including an indemnity clause.