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The vast majority of contracts are never breached and parties buy and sell goods without any problem. Neither party pays any attention to the small print terms and conditions on the reverse side of the purchase order, acknowledgement or invoice. There are occasions, however, where a party fails to perform as envisioned and at that point, the terms and conditions are read. To the horror of at least one of the parties, the terms and conditions do not protect the injured party.
Terms and conditions are drafted by a lawyer who tries to envision every problem that might arise. One company may call another and orally place an order for goods. In this instance, the seller may ship the goods and send an invoice with its terms and conditions. Because the order was oral, the buyer is silent as to the terms and conditions of its order.
Parties also order goods via the Internet and no written purchase order is ever produced. Some companies accepting orders via the Internet post their terms and conditions on a Web page for all to discover and claim that these bind the parties. The party ordering may click through an acknowledgement of these terms, yet never actually read them. The bottom line is many companies have no idea of the terms and conditions that regulate the sale unless something goes wrong. It is then that the buyer, seller and their attorneys become involved in the "battle of the forms."
The classic battle of the forms often ends up in the court system. It is worthwhile to examine the story of two companies that found themselves involved in this battle.
Challenge Machinery Company v. Mattison Machine Works
Challenge was a manufacturer of precision parts. Mattison manufactured the machines that made the precision parts. Challenge wanted to purchase one of Mattison's precision surface grinders. Mattison sent a price quotation to Challenge containing the price quote on one page with the following language:
WE PROPOSE TO FURNISH THE MATERIAL SPECIFIED BELOW AT THE PRICES QUOTED AND SUBJECT TO THE TERMS AND CONDITIONS STATED ON THE REVERSE SIDE OF THIS FORM WHICH ARE HEREBY EXPRESSLY MADE A PART OF THIS OFFER. NO DIFFERENT OR ADDITIONAL TERMS CONTAINED IN ANY PURCHASE ORDER, ACCEPTANCE...