Butler Machine Tool Co. Ltd v Ex-Cell-O Corporation (England) Ltd [1979] 1 WLR 401 (CA)
On 23 May 1969, the sellers issued a quotation offering to sell a machine tool to the buyers for
£75,535, delivery to be in ten months’ time. The offer was stated to be subject to certain terms and conditions, which ‘shall prevail over any terms and conditions in the buyer’s order’.
The conditions included a price variation clause providing for the goods to be charged at the price on the date of delivery. On 27 May, the buyers replied by placing an order for the machine. The order was stated to be subject to certain terms and conditions, which were materially different from those put forward by the sellers and which, in particular, made no provision for a variation in price. At the foot of the buyers’ order, there was a tear-off acknowledgement of receipt of the order stating:
‘We accept your order on the Terms and Conditions stated thereon.’
On 5 June, the sellers completed and signed the acknowledgement, and returned it to the buyers along with a letter stating that the buyers’ order was being entered in accordance with the sellers’ quotation of 23 May. When the sellers came to deliver the machine, they claimed that the price had increased by £2,892. The buyers refused to pay the increase in price and the sellers brought an action claiming that the price variation clause contained in their offer entitled them to the increased price. The buyers contended that the contract had been concluded on the buyers’ terms and was therefore a fixed price contract.
Held: The contract had been concluded on the buyers’ terms. The majority, Lawton and Bridge LJJ, held that the buyers’ order was a counter-offer, which the sellers had accepted by completing and returning the acknowledgement.
LORD DENNING: In many of these cases our traditional analysis of offer, counter-offer, rejection, acceptance and so forth is out of date. This was observed by Lord Wilberforce in New Zealand Shipping Co. Ltd v A.M. Satterthwaite & Co. Ltd [1975] AC 154, 167. The 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. As Lord Cairns said in Brogden v Metropolitan Railway Co. (1877) 2 App Cas 666, 672:
. . .there may be a consensus between the parties far short of a complete mode of expressing it, and that consensus may be discovered from letters or from other documents of an imperfect and incomplete description; . . .Applying this guide, it will be found that in most cases when there is a ‘battle of forms’, there is a contract as soon as the last of the forms is sent and received without objection being taken to it. That is well
observed in Benjamin [on Sale of Goods]. The difficulty is to decide which form, or which part of which form, is a term or condition of the contract. In some cases the battle is won by the man who fires the last shot. He is the man who puts forward the latest terms and conditions: and, if they are not objected to by the other party, he may be taken to have agreed to them. Such was British Road Services Ltd v Arthur
V. Crutchley & Co. Ltd [1968] 1 Lloyd’s Rep 271, 281–2, per Lord Pearson; and the illustration given by Professor Guest in Anson’s Law of Contract when he says that ‘the terms of the contract consist of the
terms of the offer subject to the modifications contained in the acceptance’.In some cases the battle is won by the man who gets the blow in first. If he offers to sell at a named price on the terms and conditions stated on the back: and the buyer orders the goods purporting to accept the offer—on an order form with his own different terms and conditions on the back—then if the difference 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.
There are yet other cases where the battle depends on the shots fired on both sides. There is a concluded contract, but the forms vary. The terms and conditions of both parties are to be construed together. If they can be reconciled so as to give a harmonious result, all well and good. If differences are irreconcilable—so that they are mutually contradictory—then the conflicting terms may have to be scrapped and replaced by a reasonable implication.
In the present case the judge [at first instance] thought that the sellers in their original quotation got their blow in first: especially by the provision that ‘these terms and conditions shall prevail over any terms and conditions in the buyer’s order’. It was so emphatic that the price variation clause continued through all the subsequent dealings and that the buyers must be taken to have agreed to it. I can understand that point of view. But I think that the documents have to be considered as a whole. And, as a matter of construction, I think
the acknowledgment of June 5, 1969, is the decisive document. It makes it clear that the contract was on the buyers’ terms and not on the sellers’ terms: and the buyers’ terms did not include a price variation clause.
