Butler Machine Tool Co Ltd v Ex-Cell-O Corpn (England) Ltd

Where an apparent acceptance introduces terms which materially alter an offer, it rejects the original offer and constitutes a counter-offer. The original terms cease to be available for acceptance.

In a battle of forms, the contract is made on the terms of the counter-offer where the original offeror signs and returns an unequivocal acknowledgement accepting those terms. An accompanying reference to the original quotation does not reincorporate its conditions where, read in context, it merely identifies the goods and price. Equivocal language cannot override an express acceptance of the counter-offer.

The sellers quoted to supply a machine at a stated price under conditions that included a price variation clause. The buyers ordered the machine on materially different conditions, which contained no such clause. The sellers then signed and returned the buyers’ acknowledgement accepting the order on the conditions stated in it, while an accompanying letter referred to the original quotation.

Thesiger J held that the sellers’ price variation clause prevailed and awarded them £2,892. The buyers appealed. The central issue was whether the contract incorporated the sellers’ price variation clause or was a fixed-price contract on the buyers’ terms.

1. Appeal allowed unanimously. The contract was made on the buyers’ terms and contained no price variation clause. Judgment was entered for the defendants, with costs in the Court of Appeal and below. Leave to appeal to the House of Lords was refused.

2. Lord Denning MR held, by the traditional analysis, that the sellers’ quotation was an offer. The buyers’ order introduced material additions and differences concerning installation, delivery, carriage and cancellation. It therefore rejected the quotation and constituted a counter-offer. The sellers accepted that counter-offer by signing and returning the acknowledgement stating that they accepted the order on the terms and conditions stated thereon.

3. Lawton LJ and Bridge LJ treated the classical rules of offer and acceptance as determinative. A counter-offer containing materially different terms rejects and terminates the original offer. The conditions attached to the sellers’ quotation consequently ceased to govern the transaction. The sellers’ formal acknowledgement created a fixed-price contract on the buyers’ terms.

4. The references in the accompanying correspondence to the original quotation identified the machinery and its quoted price. They did not reincorporate the small-print conditions. Bridge LJ added that, at their highest, those references were equivocal and could not override the clear and unambiguous acceptance contained in the signed acknowledgement.

5. Lord Denning MR also considered that battles of forms may sometimes be resolved by examining all the documents and conduct to determine whether agreement was reached on material points. Depending on construction, the latest terms may prevail, compatible terms may operate together, and irreconcilable terms may be displaced by a reasonable implication. That broader approach was not necessary to the unanimous result, which the other members of the court founded on classical offer-and-acceptance principles.

6. Bridge LJ held that Schedule 2 to the Uniform Laws on International Sales Act 1967 did not apply because the transaction was not an international sale as defined by the statute. He declined to decide whether the common law differed from the principle concerning immaterial modifications in article 7(2).

1. Court of Appeal: Allowed the buyers’ appeal unanimously, set aside the decision below and entered judgment for the defendants. Costs were awarded here and below. Leave to appeal to the House of Lords was refused.
2. High Court, Queen’s Bench Division: Thesiger J held that the sellers’ price variation clause remained effective and awarded the sellers £2,892. No citation is stated in the judgment.