Butler Machine Tool Co Ltd vs Ex-Cell-O Corporation
[1979] 1 WLR 401
Case Summary
[Contract Law]
FACTS:
The sellers made a quotation offering to sell a machine tool to the buyers and deliver it within 10 months. The offer was subject to terms and conditions, which would prevail over that in the buyer’s order. The conditions included a price variation clause providing for the goods to be charged at the price on the delivery date. The buyers placed an order subject to certain terms and conditions materially different from those of the sellers. The sellers accepted their order. During delivery, the sellers claimed a price increase. The buyers refused to pay the price increase, and the sellers brought an action claiming they were entitled to increase the price under the price variation clause in their offer. The buyers contended that the contract had been concluded on the buyer’s terms and was, therefore, a fixed-price contract. The judge upheld the seller’s claim, and the buyers appealed.
JUDGEMENT:
Lord Denning MR.
- A contract has been concluded. But on what terms? The sellers rely on their general conditions and on their last letter, and the buyers rely on the acknowledgement signed by the sellers.
- The quotation of 23rd May was an offer by the sellers to the buyers containing the terms and conditions. The order of 27th was purported to be an acceptance of that order in that it was for the same machine and at the same price, but it contained certain additions, which was, in law, a rejection of the offer and constituted a counter offer. So the seller's letter on 5th June was an acceptance of the counteroffer.
- The acknowledgement of 5th June is the decisive document. It makes it clear that the contract was on the buyer’s terms and not on the seller's, and the buyer's terms did not include a price variation clause.
- Appeal allowed.
Lawton LJ. :
- If the letter of 5th June, which accompanied the form acknowledging the terms which the buyers had specified, had amounted to a counter-offer, then the parties never were ad idem.
- The buyers did not accept the counteroffer because they ultimately took physical delivery of the machine. By the time they took physical delivery of the machine, they had made it clear by correspondence that they were not accepting any price escalation clause in any contract they had made with the plaintiffs.
- Appeal allowed.
PRINCIPLE: The “last shot doctrine” was applied in this case wherein, the seller who had finally given his assent by signing the tera-off slip was entitled to follow the terms of contract as prescribed by the buyer.
-Ishika Tanwar
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