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    England and Wales Court of Appeals (Civil Division)

    Uploaded by

    Shubham Singh
    it is a presentation on contract case.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
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    of 16

    ENGLAND AND WALES COURT OF

    APPEALS (CIVIL DIVISION)


    Appellants: The Butler Machine Tool
    Company Ltd
    Vs.
    Respondent:
    APPELLANTS: THE BUTLER Ex-Cell-O
    MACHINE Corporation
    TOOL (England)
    Decided On:25th
    Limited
    COMPANY LTD April,1977
    Citation: [1979]1
    VS. ALL ER 965

    RESPONDENT: EX-CELL-O CORPORATION


    (ENGLAND) LTD
    HONORABLE JUDGES
    1.DENNING 2.LAWTON 3.BRIDGE

    Lord Denning Lord Bridge


    IMPORTANT TERMS TO KNOW BEFORE EXPLORING THE
    CASE

    1. Battle Of Forms
    2. Counter Offer
    3. Price Variation Clause
    “AN OFFER MADE AGAINST THE ORIGINAL OFFER.”
    “THE COUNTER-OFFER KILLS THE ORIGINAL OFFER”
    “Price Variation Clause (PVC) are
    used in settling claims between
    purchaser and supplier for
    variation in the basic price of raw
    materials from the period of
    tendering till the date of
    delivery.”
    FACTS OF THE CASE
    THE BUTLER MACHINE TOOL COMPANY
    LTD EX-CELL-O CORPORATION (ENGLAND) LTD
    (APPELLANT: SELLER) (RESPONDENT: BUYER)

    • Quotation of seller (Offer) • Quotation of buyer (Counter-Offer)

    1. On 23rd May,1969 quoted a 1. On 27th May,1969 gave an order


    price for a machine tool of 💷 for the self-same machine at the
    75,535. self-same price.
    2. There were an additional item for
    2. Delivery was to be given in 10
    the cost of installation,💷3,100.
    months.
    3. Delivery was to be given in 10-
    11 months.
    FACTS OF THE CASE

    TERMS AND CONDITIONS TERMS AND CONDITIONS


    (SELLERS’ OFFER) (BUYERS’ COUNTER-OFFER)
    1. Price variation clause. 1. Did not contain any price variation
    clause.
    2. Cost of carriage: Ex-Warehouse
    2. Cost of carriage:It was to be paid to
    means the buyer of goods is
    the delivery address of the buyer.
    responsible for arranging and
    3. In case of late delivery:They reserved
    paying for them to be
    the right to cancel if delivery was not
    transported from the seller‘s
    made by the agreed date.
    warehouse.
    • On the foot of their order there was a
    3. In case of late delivery:They tear-off slip headed
    would not entertain cancellation “Acknowledgement: Please sign and
    of order due to late delivery. return to Ex-Cell-O.
    • FACTS OF THE CASE

    ACCEPTANCE

    • On the 5th June,1969 the Seller wrote this letter to the buyers: “We have
    pleasure in acknowledging receipt of your official order dated 27 th May
    covering the supply of one Butler Double Column Plane-Miller. This being
    delivered in accordance with our revised quotation on 23 rd may for delivery
    in 10/11 months, i.e. March/April 1970. We return herewith duly completed
    your acknowledgement of order form”.
    • No doubt a contract was then concluded.
    • Note:The machine tool was not delivered until November 1970. By that time
    costs had increased so much that the seller’s claimed an additional sum
    of 💷2,892 as due to them under the price variation clause.
    • The buyers,Ex-Cell-O Corporation, rejected to pay the excess charge.
    ISSUES OF THE CASE

    1. Whether the sellers are entitled to get increase in price


    under price variation clause?
    2. The contact was created on who’s terms and conditions?
    • Note: When buyers refused to pay the increased price,then
    the seller sued them for the breach of contract in the lower
    court.
    • Judgement of lower court: “The contract was concluded on
    the sellers’ rather than buyers’ terms and conditions and
    was therefore the contract subject to the price variation”.
    JUDGEMENT
    Lord Justice
    Denning
    1. He analysed the case through traditional method.
    2. In the case: Trollope & Colls Ltd. & Ors. V. Atomic Power Constructions Ltd.[1963]1 W.L.R. 333 at
    page 337: “...the counter-offer kills the original offer”.
    3. “When there is a 'battle of the forms’,than there is a contract as soon as the last of the forms is sent
    and received without objection being taken to it”.

    4. LAST SHORT DOCTRINE: The ‘last shot’ was fired by the buyers by attaching T&C to their
    order which were materially different from those of sellers. Since, that order was received
    and acknowledged without any objection to any of the T&C attached therewith, hence,
    buyers’ terms will prevail.
    5. Further, according to him,the document comprised in ‘battle of forms’ were to be
    considered as a whole. Therefore,the acknowledgement made by the sellers was a final
    document which 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.
    JUDGEMENT
    Lord Justice
    Bridge

    1. Article 7 of the Schedule 2 of the Uniform Laws on the Formation of Contracts under
    International Sales Act 1967 would not be applicable as this Contract does not fall under
    international sales of goods.
    2. He followed the Classical Doctrine Approach i.e. A counter offer amounts to rejection of an
    original offer.
    3. He observed that the buyers’ order was a counter offer which destroyed the offer made in
    the sellers’ quotation.The sellers accepted “terms and conditions stated thereon” by
    signing the tear-off slip and by delivering the machine, accepted that offer.
    4. Therefore,the sellers could not claim the increase in price under the price variation clause.
    • Hence, he too allowed the appeal and enter judgement for the defendants(buyers).
    JUDGEMENT
    Lord Justice
    Lawton

    1. He too followed the Classical Doctrine Approach or the traditional method.


    2. According to him, if the letter was taken to be a counter-offer made by the
    sellers to the buyers,then there was never a consensus ad idem, and,
    hence there was never a valid offer.
    3. As the buyers had made it clear to the sellers,even before taking the
    delivery,that they were not accepting the price variation clause.
    4. Therefore,it was the fixed price contract without a price escalation clause.
    • He too agree with his Lords,the Master of the Rolls,that the appeal should
    be allowed.
    HELD

    • The court held that the letter enclosed with the


    acknowledgement slip, was in the business sense, referring to
    the quotation as to the price and the identity of the machine
    and not the small print conditions on the back of the quotation.
    Hence, it didn’t incorporate sellers’ terms back into the
    contract.
    CONCLUSION

    • After analysing the legal provisions and the judgements


    of the Lords,I am of the opinion that I agree with the
    decisions of the honorable Master OF THE ROLLS as a
    reply to an offer which purports to be an acceptance but which contains
    terms materially different from those originally set out in offer, shall amount
    to counter offer, which when duly acknowledged and accepted by the offeror
    shall amount to acceptance of the counter offer, and, shall bind him with the
    terms set out in the counter offer.
    Poku Copyright ©

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