Nordyne, Inc. v. International Controls & Measurements

United States Court of Appeals for the Eighth Circuit · Contracts

ContractsUCC Article 2Offer and AcceptancePrice QuotationsForum-Selection ClausesCourse of Dealingprice quotation as offeroffer and acceptance

Facts

Nordyne had purchased control boards from ICM for about ten years, and with each shipment ICM sent an invoice stating that the sale was accepted on the express condition that the terms on the face and reverse side applied, including a forum-selection clause requiring venue in Onondaga, New York and a one-year warranty that Nordyne had previously used. In 1997, after several months of communications about a newly modified control panel designed for Nordyne, ICM sent a detailed quotation listing price, estimated annual quantity, expiration date, packaging, shipping, payment, and other terms, and stating that conditions on the reverse were part of the quotation and that the quote was subject to the seller's standard terms and conditions contained on the order acknowledgment. After receiving and approving production samples, Nordyne signed the production approval, then sent a purchase order; ICM acknowledged the order and thereafter shipped 46,151 units with its standard invoices enclosed. After problems arose with the control panels, Nordyne sued for breach of warranty, and ICM invoked the invoice forum-selection clause to challenge venue.

Issue

Did the parties' contract include the forum-selection clause printed on the reverse side of ICM's invoices? More specifically, was ICM's July 29, 1997 quotation the offer such that the invoice terms were incorporated by reference when Nordyne accepted it?

Rule

Under Missouri law, a price quotation is generally not an offer, but a sufficiently detailed quotation can be an offer if it reasonably appears that the offeree's assent is all that is needed to create a contract. Relevant factors include the extent of prior inquiry, the completeness of the suggested bargain's terms, and the number of persons to whom the quotation is communicated. Terms incorporated by reference in such an offer, including terms reflected in the seller's standard order-acknowledgment or invoice documents and reinforced by the parties' course of dealing, become part of the contract upon acceptance.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

After three months of back-and-forth about a custom sensor assembly, Prairie Beacon Systems in St. Louis sent Lena Ortiz of Cedar Valley Equipment in Omaha a written quotation addressed only to Cedar Valley. It listed the product specifications, unit price, estimated annual usage of 12,000 units, payment terms, shipping terms, packaging terms, and an expiration date, and stated that conditions on the reverse were part of the quotation. Lena then emailed, "Approved for production—please proceed."

Under Missouri law as applied by the majority opinion, which is the best argument that a contract was formed when Lena sent the approval email?

Explanation. A price quotation is usually not an offer, but it can be if it is detailed enough and reasonably appears that the offeree's assent alone will create the contract. The majority emphasized prior negotiations, completeness of terms, and the fact that the quotation was directed to a single buyer. Those features are present here, so the approval email can operate as acceptance.