Opinion ID: 198081
Heading Depth: 3
Heading Rank: 2

Heading: UCC Section 2-207(2)(b): Materiality

Text: 54 Where, as here, both contracting parties are merchants (viz., non-consumers), see UCC § 2-104(1) (defining merchant), UCC § 2-207(2) provides that any additional or different terms proposed by the seller become part of the sales contract unless  the party which opposes the presumption of inclusion--here, Chipco--can show that at least one of the three preconditions specified in § 2-207(2) was met. See, e.g., Avedon Eng'g, Inc. v. Seatex, 126 F.3d 1279, 1284 (10th Cir.1997); Comark Merch'g, Inc. v. Highland Group, Inc., 932 F.2d 1196, 1201-02 (7th Cir.1991); Dale R. Horning, 730 F.Supp. at 966 n. 2; LTV Energy Prods., 162 B.R. at 956. 55 Section 2-207(2)(b) allows the buyer to show that a damages-limitation clause proposed by the seller did not become part of the contract, even though not objected to by the buyer, because its inclusion would work a material alteration. Although the UCC does not define material alteration, Official Comments 4 & 5 advise that a new term proposed by the seller is a material alteration where it would result in [unreasonable] surprise or hardship [to the buyer] if incorporated without [the buyer's] express awareness. UCC § 2-207 cmt. 4 (emphasis added). Of course, Comments 4 and 5 are illustrative only and the UCC provides no further elucidation of the terms surprise or hardship. 56 We need not define these terms, however, since Chipco did not contend in its opposition to the motion for partial summary judgment that the damages-limitation clause was excludable as a material alteration. Chipco's nineteen-page opposition to summary judgment contained six discrete sections. In Section III, Chipco argued that two other clauses in the Adell invoice--the warranty disclaimer and a ten-day notification-of-defect requirement--contravened § 2-207(2)(b) because they were material alterations. Chipco attempted this argument despite the fact that Roto-Lith, then extant, seemingly foreclosed it. Later, in Section V of its opposition, Chipco devoted but one paragraph to discussing why the damages-limitation clause should not be included in the contracts. In contrast to Section III, Section V conspicuously avoided any reference to § 2-207(2)(b), instead relying on the wholly inapposite provisions in § 2-718. 8 Noticeably absent as well were any legal arguments or factual allegations relevant to the pivotal issues of surprise and hardship. See LTV Energy Prods., 162 B.R. at 956-57 (Factors bearing on this issue [of 'surprise'] [may] include the parties' prior course of dealing and the number of written confirmations that they exchanged, industry custom and the conspicuousness of the term.); id. at 957 (noting divergent opinions concerning appropriate test for hardship). Finally, even assuming that Chipco inadvertently overlooked the § 2-207(b) issue in its rule 56 submissions, inexplicably it filed no motion for reconsideration once Judge Hornby explicitly ruled that the damages-limitation clause was not a material alteration. See MCI Telecomms. Corp. v. Matrix Communications Corp., 135 F.3d 27, 33 (1st Cir.1998) (party's unexplained failure to file motion for reconsideration may serve as further evidence of waiver). 9 57 Thus, Chipco not only waived the § 2-207(2)(b) argument, Martinez v. Colon, 54 F.3d 980, 987 (1st Cir.1995) (legal theories not raised in the lower court cannot be raised for the first time on appeal), but as the party bearing the burden of proof on § 2-207(2)(b) materiality at trial, it is not entitled to a second chance to make an evidentiary proffer on that issue before a jury, see Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (summary judgment is warranted if the nonmovant fails to adduce sufficient evidence to establish any element essential to its case, and upon which it would have the burden of proof at trial).