Opinion ID: 474191
Heading Depth: 3
Heading Rank: 1

Heading: The U.C.C. Argument

Text: 43 Mostek claims that the 1985 QPA was not a contract, that it was merely a quotation of prices and a solicitation of offers, and that any contractual claim by Teradyne must, therefore, be based on the purchase orders. The purchase orders stated that they were offers to purchase goods at stated prices and delivery dates, and expressly limited acceptance to the terms of the offer. The termination portion of the orders stated that Mostek might cancel at any time. Relying on Sec. 2-207(2) of the U.C.C. and this court's interpretation of that provision in Rotolith, Ltd. v. F.P. Bartlett & Co., Inc., 297 F.2d 497 (1st Cir.1962), Mostek contends that Teradyne could not materially alter Mostek's offered terms by imposing a cancellation provision. 44 Section 2-207 of the U.C.C. provides that an expression of acceptance or written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those agreed upon, unless acceptance is expressly made conditional upon assent to the additional or different terms. Section 2-207(2) provides that the additional terms are to be construed as proposals for additions to the contract and, between merchants, become part of the contract unless, inter alia, the offer expressly limits acceptance to the terms of the offer. 8 Mostek cites Roto-Lith as authority for the proposition that the additional terms, i.e., the cancellation provisions, in Teradyne's acceptance of Mostek's offer could not become part of the contract because they materially altered Mostek's offered terms. In Rotolith, we held that under Sec. 2-207, a response which states a condition materially altering the obligation solely to the disadvantage of the offeror is an acceptance expressly conditional on assent to the additional terms. 297 F.2d at 500. 45 In the alternative, Mostek argues that even if the terms of the QPA governed the orders, the cancellation provision would be unenforceable because Mostek did not initial a cancellation selection as required by Schedule E of the QPA. Mostek relies on the fact that Schedule E provided that the alternative selected would apply unless the customer's purchase order stated otherwise. Mostek claims that it initialed a cancellation selection in all the previous QPA and, therefore, that its failure to do so in the 1985 QPA, indicates a clear intention to make the terms of the purchase order apply. Finally, Mostek relies on its course of dealing with Teradyne in the past as indicating that there was no intention to have cancellation charges apply, claiming that it frequently cancelled orders in the past without having any such charges assessed against it. 46 Teradyne counters that Sec. 2-207 does not apply on the ground that this case does not involve a situation where the offer and acceptance contain inconsistent terms. Teradyne contends that the 1985 QPA was not an acceptance of Mostek's purchase order offer, but rather, that it superseded the terms of the purchase order as a new independent contract or a modification of the old, pursuant to Sec. 2-209 U.C.C. 9 Teradyne points to the fact that the QPA was made retroactively effective to allow discounts to be applied to the earlier placed orders, and claims that, in essence, it agreed to allow the discounts to apply retroactively in consideration of Mostek's agreeing to the terms of the QPA. Teradyne contends further that it would still be entitled to recover even if the QPA was deemed not to supersede the purchase order terms, on the ground of repudiation. 47 Teradyne does not address the significance of Mostek's failing to initial a cancellation selection, other than to point out that the provision for cancellation charges was conspicuously included in Sec. 8 of the QPA which incorporated Schedule E by reference. It denies, however, that Mostek was ever allowed to cancel at will in the past. According to Teradyne, Mostek avoided paying cancellation charges in the past because it negotiated new orders with Teradyne in lieu of paying such charges, a course not open to it once it decided to wind down and eventually sell out. 48 After examining the contentions of both sides, we conclude that the trial court did not abuse its discretion in holding that Teradyne had a reasonable likelihood of success on the merits. Mostek makes no attempt to explain how the retroactivity of the 1985 QPA squares with its argument that Sec. 2-207 of the U.C.C. applies. Its argument that it is not bound to pay cancellation charges because it did not initial a cancellation selection is also tenuous. Teradyne typed in a cancellation selection on the Schedule E form and thus clearly indicated its intention to assess such charges. It is not clear that this obligation should be deemed waived merely because the form was not initialed in the manner specified. Moreover, there is force in Teradyne's argument that it could recover for repudiation, even if not pursuant to the cancellation provisions, on the grounds of its plausible assertions that it incurred loss as a result of Mostek's cancellations because it had already commenced production on the orders.