Battle of the Forms in a Hinge Supply Contract
Haviland Kitchen Co., an Ohio cabinetmaker, emails a purchase order to Brightline Hardware, an Indiana supplier, for 1,200 model H-40 stainless-steel hinges at $4.10 each, 110-degree opening, 48-hour shipment, payment net 45 days, Ohio law governing. Brightline's acknowledgment, sent the next day, reads: 'Acceptance expressly conditioned on the terms herein: payment net 20 days; all disputes arbitrated in Indianapolis; seller disclaims all warranties, express and implied, including fitness for a particular purpose.' Haviland sends no reply. Brightline ships 1,200 hinges, but they are the 105-degree variant; the 110-degree model was out of stock. Haviland installs 300 of them before discovering the cabinet doors will not open to the specified angle, then rejects the remaining 900. Its controller emails Brightline: 'Our PO says net 45; we will not pay on 20-day terms.' Haviland has paid nothing. Brightline invokes the arbitration clause and demands payment.
1. Which terms form the contract-specifically, is the Indianapolis arbitration clause enforceable?
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Ohio has enacted UCC § 2-207 as R.C. 1302.10, so this is a statutory analysis, not common-law mirror-image or last-shot.
Step one-§ 2-207(1). A definite and seasonable expression of acceptance operates as an acceptance even though it states additional or different terms, unless acceptance is expressly made conditional on assent to those terms. 'Acceptance expressly conditioned on the terms herein' is the textbook conditional-acceptance formula. The consequence is that the acknowledgment is a counteroffer, and no contract forms under (1).
Step two-§ 2-207(3). The parties performed anyway. Brightline shipped, Haviland received, installed, and partially paid, and the controller's email acknowledged the deal while disputing only the payment term. Conduct of both parties recognizing a contract creates one, and its terms are those on which the writings agree, plus UCC gap-fillers. The disagreed terms-net 45 versus net 20, Indianapolis arbitration, and the warranty disclaimer-drop out.
Result. The arbitration clause is not part of the contract. With no agreement to arbitrate, the Federal Arbitration Act has nothing to compel, and a court decides arbitrability. Even under the alternative § 2-207(2) route (treating the form as an acceptance with different terms), an arbitration clause and a warranty disclaimer are material alterations between merchants and would be knocked out.
Risk to flag. A court could find that Haviland's silence plus installing the goods manifested assent to the counteroffer, reviving the clause. Haviland's best counter-evidence is that it never signed, that it objected in writing to the 20-day term, and that under § 2-206 an order or offer invites acceptance by prompt shipment, not by counteroffer.
2. Did Haviland accept, reject, or revoke as to the 300 installed hinges and the 900 returned hinges?
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The shipment splits into three separate questions.
The 300 installed hinges-accepted. Section 2-606(1) provides that goods are accepted when the buyer, after a reasonable opportunity to inspect, signifies that they are conforming or that it will keep them despite nonconformity, or does any act inconsistent with the seller's ownership. Installing cabinets with the hinges is exactly that act. Those 300 are accepted.
The 900 rejected hinges-valid rejection if timely. Under § 2-601 (perfect tender), the buyer may reject the whole, or accept part and reject the rest, if the goods fail in any respect to conform. A 105-degree hinge is not the 110-degree model ordered, and the difference is functional-the doors will not open to the specified angle, not a cosmetic deviation. Rejection must be seasonable, and the buyer must give timely notice identifying the defect (§ 2-602). Whether the notice came seasonably is a fact question; it should be sent the day the installer discovers the problem.
Revocation as to the 300-uncertain. Section 2-608 permits revocation only if the nonconformity substantially impairs value to the buyer and the buyer accepted either with a reasonable assumption that it would be cured (and it was not) or without discovery because of difficulty of discovery or the seller's assurances. Revocation must occur before any substantial change in the goods' condition and within a reasonable time after discovery. Installing 300 hinges and continuing to use the cabinets weakens the claim, but if the doors genuinely will not open far enough to function, impairment may be substantial.
Cure. Section 2-508 gives the seller a reasonable time to substitute conforming goods only if the time for performance has not expired, or if the seller reasonably believed the tender would be acceptable. Brightline shipped a different model, not a good-faith tender expecting acceptance, so its cure right is doubtful.
3. Assuming the arbitration clause and disclaimer fall out, what can Haviland recover and what must it prove?
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With the disclaimer knocked out, the implied warranty of merchantability (§ 2-314) and the implied warranty of fitness for a particular purpose (§ 2-315) apply. Remedy analysis:
Cover. Section 2-712 allows the buyer, after breach, to make a good-faith purchase of substitute goods without unreasonable delay and recover the difference between the cost of cover and the contract price, plus incidental and consequential damages, less expenses saved. If Haviland buys 900 110-degree hinges elsewhere at $6.25 each, the measure is $5,625 minus $3,690, or $1,935-only for the 900, since the 300 were accepted.
Market price. Section 2-713 is the alternative, measuring the difference between market price at tender and the contract price. Cover is generally preferred because it reflects actual replacement cost.
Consequential damages. Section 2-715(2)(a) permits recovery for losses from general or particular requirements of which the seller had reason to know at contracting and which could not reasonably be prevented. Lost profits from delayed kitchen installations are recoverable only if Brightline knew at the time of contracting-the 48-hour shipping term and any email mentioning a specific job are the evidence. Hadley v. Baxendale foreseeability controls.
Notice. Section 2-607(3)(a) bars any remedy absent notice of breach within a reasonable time after discovery. That requirement applies to the 300 as well.
Mitigation and incidental damages. Haviland cannot sit on the defect, and it may recover reasonable inspection, storage, and return costs under § 2-715(1). The 20-day payment argument is a red herring: the payment terms were knocked out, so § 2-310(a) makes payment due on delivery.