BUTLER MACHINE TOOL LTD v EX-CELL-O CORPORATION OTHER RESPONSES TO AN OFFER

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 (p. 40) 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.

LAWTON LJ: The modern commercial practice of making quotations and placing orders with conditions attached, usually in small print, is indeed likely, as in this case to produce a battle of forms. The problem is how should that battle be conducted? ... In my judgment, the battle has to be conducted in accordance with set rules. It is a battle more on classical 18th century lines when convention decided who had the right to open fire first rather than in accordance with the modern concept of attrition.

The rules relating to a battle of this kind have been known for the past 130-odd years. They were set out by Lord Langdale MR in Hyde v Wrench, 3 Beav 334, 337, ... and, if anyone should have thought they were obsolescent, Megaw J in Trollope & Colls Ltd v Atomic Power Constructions Ltd [1963] 1 WLR 333, 337 called attention to the fact that those rules are still in force.

When those rules are applied to this case, in my judgment, the answer is obvious. The sellers started by making an offer. That was in their quotation. The small print was headed by the following words:

General. All orders are accepted only upon and subject to the terms set…