Opinion ID: 2994629
Heading Depth: 2
Heading Rank: 3

Heading: Contract Formation, Terms, and Modifications

Text: Midwest argues strenuously that the district court overlooked disputed issues of material fact when it granted summary judgment based on the conclusion that the definitive date on which PI and CMI formed their contract was June 29, through the equipment sales order from CMI bearing that date. The contract might have been formed, it suggests, at any of three earlier times, and critically, at neither of those points had CMI’s language excluding warranties entered the picture. One possibility has CMI’s April 29 form as the offer, and PI’s April 30 fax as the acceptance; a second possibility finds an offer- acceptance sequence in the two April 30 exchanges (the fax from PI to CMI and then the confirmation fax from CMI back to PI); and the third regards the April 30 fax from CMI to PI as the offer and the May 4 purchase order as the acceptance. Midwest points out, correctly enough, that under U.C.C. sec. 2-204 (codified in Oklahoma as 12A Okla. Stat. sec. 2-204; for simplicity we refer to the U.C.C. alone) that any manner sufficient to show agreement is enough to form a contract for the sale of goods. Midwest also points out, correctly in our view, that the district court erred to the extent that it thought the facts undisputedly pointed to the June 29 communication as the document that clinched the formation of this contract. But this is not enough, contrary to Midwest’s view, to show that the result the district court reached was in error. The real question is whether the parties to the contract--PI and CMI-- chose to limit the warranty CMI was giving, either at the time they contracted or in a later modification. Here too Midwest has problems. Under Oklahoma law, the limitation of warranty language either entered into the contract at the time of its formation, or the parties later agreed to add it. Midwest’s assumption that contracting parties cannot modify an agreement if there is a third-party beneficiary whose rights have vested is not supported by Oklahoma law, and thus it cannot defeat later changes that the parties themselves chose to make. We agree with the district court that the testimony of PI President Livingston, to the effect that all of the purchase order PI sent to CMI was part of the deal, is not enough to raise a genuine fact over the question whether PI’s warranty terms took precedence over CMI’s later limitation. No one directed Livingston’s attention to warranties at this point in his deposition. In fact, from the time CMI started performing to the present neither of the parties to the agreement thought that PI’s original language survived. Without more, this was too slender a reed to require jury resolution of the question. We would reach the battle of the forms question, which is governed by U.C.C. sec. 2-207, only if the June 29 order is either the offer or the acceptance. The U.C.C. does not give a clear answer about the way courts must handle contradictory terms (as opposed to additional terms, see sec. 2-207(2)). Given that fact, and our finding earlier that Midwest is not a third- party beneficiary in any event, we prefer to leave this problem for resolution in the Oklahoma courts in a case where it matters. For what little it is worth, we think it likely that Oklahoma would take the same approach for different terms as it does under U.C.C. sec. 2- 207(2)(a) for additional terms: that is, it would not incorporate the new terms into a contract between merchants where one form explicitly limits acceptance to the terms of the offer. Here, CMI’s form explicitly says that [n]o other terms are acceptable and any proposed terms and conditions which vary from or are in addition to those contained in this order are deemed rejected. If that is correct, then Midwest has no case under this theory either. Suppose, however, that a jury might conclude that one of the earlier potential contracts was the governing agreement. Here again, Midwest wins only if the parties had no power to make later changes that disfavored (the assumed) third-party beneficiary. Midwest argues that they did not, relying on the Restatement (Second) of Contracts sec. 311(3), under which the principal parties’ power to modify the terms of an agreement ends when the third-party beneficiary manifests assent to it at the request of the promisor or promisee. This is what Midwest did when it sent the May 10 letter concerning the payment terms, it claims. The problem here for Midwest, once again, is that Oklahoma law governs this case. Oklahoma has not adopted sec. 311 of the Restatement (Second) of Contracts as its law. Indeed, as a general matter the Oklahoma courts do not seem to be inclined to adopt rules from the Contracts Restatement, perhaps because Title 15 of the Oklahoma Code is a comprehensive legislative statement of the law of contracts in that state. Oklahoma law says only that [a] contract, made expressly for the benefit of a third person, may be enforced by him at any time before the parties thereto rescind it. 15 Okla. Stat. sec. 29 (1996). Nothing in this language suggests that Oklahoma has limited the power of the principal parties to modify their agreement. Even if Midwest is correct, therefore, that there was once an agreement with no limitation of warranties and the parties later modified it, it had no right to prevent that modification and thus no claim today against CMI.