Opinion ID: 1120022
Heading Depth: 1
Heading Rank: 2

Heading: Isaacson's Claim Against Christianson and Christianson's Counterclaim

Text: Christianson entered into its contract with the state to build the bridge on July 16, 1973. The day before Christianson submitted its bid to the state, Isaacson had given Christianson a telephone quotation of $396,000 for the manufacture of special low temperature steel that state specifications required for the bridge. After receiving notification of the contract award, Christianson asked Isaacson to submit a written proposal containing the specifics of the telephoned quotation. Christianson at that time did not inform Isaacson that Christianson had been awarded the contract. Isaacson prepared a Proposal Contract and mailed it to Christianson on July 16, 1973. The Proposal Contract contained conditions on the reverse side including a force majeure clause and a limitation of consequential damages clause. [18] On July 27 Christianson called Isaacson and asked what the price would be F.O.B. Cantwell, rather than Seattle as had been specified in the proposal. On July 30 Isaacson called Christianson and quoted a new contract price of $420,000 with the Cantwell delivery and a change in the pier nosing height. On August 2 Christianson informed Isaacson by telephone that the job was theirs for $408,000, and Isaacson agreed to that price. After the August 2 telephone conversation, Christianson sent Isaacson a letter confirming the telephone call. [19] Isaacson sent Christianson an acknowledgment dated August 3, 1973. In its letter Christianson stated that a formal purchase order would follow. That order, however, was prepared but never sent. On the order that was prepared, a question mark was typed next to the term Required Delivery Date. After receiving Christianson's letter, Isaacson telephoned Christianson and stated that delivery was predicated on mill performance, i.e., Armco's performance, and that Isaacson, therefore, could not promise delivery in Seattle in late January 1974, the delivery date specified in Christianson's letter. Isaacson did not receive all the steel from Armco until March 1974. There was then a strike at Isaacson's plant from April 1, 1974, through May 20, 1974, and the steel did not arrive in Cantwell until August 1974. The trial court concluded that an oral contract was entered into by Isaacson and Christianson by telephone on August 2, 1973, and that the proposal sent by Isaacson to Christianson on July 16, 1973, served merely as the basis for further negotiation. Since the court considered the proposal to be merely an offer that was never accepted, it found that the terms of that offer, including the force majeure clause and the limitation of consequential damages clause, [20] did not become part of the contract. The terms of the oral contract, as confirmed by the parties' correspondence, were found by the court to provide for a price of $408,000, F.O.B. Cantwell, and delivery in late January 1974. The court further concluded that Isaacson knew of Christianson's crucial need to receive the steel in January and that the delivery date agreed to in the oral contract was neither expressly nor by implication made conditional on Isaacson's timely procurement of steel from a supplier. Finally the court found that the original contract was modified to provide for delivery by February 20, 1974. On appeal Isaacson contends that the trial court erred in failing to find that the Proposal Contract was an offer, the terms of which were accepted by Christianson. We agree with Isaacson. We find that the Proposal Contract, including the force majeure clause and the limitation of consequential damages clause, was an offer and that Christianson accepted that offer. The terms of the proposal, as subsequently modified by the parties, constitute the agreement of the parties. We hold that the trial court erred in not giving effect to the force majeure clause and the limitation of consequential damages clause, and we therefore reverse the judgment which was entered against Isaacson in favor of Christianson. [21] In considering the question of Isaacson's liability for damages resulting from late delivery, it is first necessary to determine the terms of the Isaacson-Christianson contract. Isaacson contends that the proposal of July 16, 1973, was an offer which was accepted by Christianson in the August 2, 1973, telephone conversation, during which Christianson informed Isaacson that the steel fabrication job was theirs. The trial court concluded that the proposal was never in form accepted, but serve[d] as a basis for further negotiations. [22] AS 45.05 does not include a definition of an offer. Therefore, pursuant to AS 45.05.006, the common law must be consulted to resolve the question. [23] See 1 W. Hawkland, A Transactional Guide to the Uniform Commercial Code § 1.08, at 12 (1964); 1 A. Squillante & J. Fonseca, Williston on Sales § 7-3, at 213 (4th ed. 1973). We relied on Professor Corbin's definition of an offer in our decision in Spenard Plumbing & Heating Co. v. Wright, 370 P.2d 519, 524-25 (Alaska 1962). Professor Corbin has defined an offer as an expression by one party of his assent to certain definite terms, provided that the other party involved in the bargaining transaction will likewise express his assent to the identically same terms, and he emphasizes that an offer creates a power of acceptance in the offeree. 1 A. Corbin, Contracts § 11, at 23-24 (1963). Isaacson's proposal appears to satisfy this definition of an offer. Isaacson's assent to the terms in the proposal is indicated by the signature of R.K. Uht, Vice-President of Isaacson. Furthermore, the language of the proposal clearly indicates that it contemplates the possibility of acceptance by Christianson. For example, the last paragraph of the first page of the proposal provides in part: This proposal, when signed by the purchaser or duly authorized representative, is an acceptance of the above terms and conditions. [24] The proposal also included a space for the purchaser's signature under the words Proposal Accepted. The question is whether there was a definite and seasonable expression of acceptance or a written confirmation sent by Christianson accepting Isaacson's offer within the meaning of AS 45.05.062(a). [25] Isaacson argues that the August 2, 1973, telephone conversation was the acceptance of the proposal with changes as to the three terms discussed: (1) price, (2) F.O.B. point, and (3) pier nose height. Christianson's letter of confirmation of August 2, 1973, mentioned those three terms and the fact that delivery was required by late January, 1974. It also confirmed in writing the fact that Isaacson had received the award of the contract for the steel. The court concluded that in the August 2 telephone call Christianson entered into an oral contract based upon the proposal but did not accept the proposal. Our view that the proposal was an offer that was accepted finds support in Jorgensen Co. v. Mark Construction, Inc., 56 Haw. 466, 540 P.2d 978 (1975), a case involving facts very similar to those of the instant case. In Jorgensen, Mark was bidding on a state highway construction project. Prior to submitting its bid it obtained a quotation from Jorgensen for steel pipe that would be required in the project. Mark was awarded the contract. At Jorgensen's request, Mark issued a purchase order to Jorgensen for the pipe. The purchase order, however, did not mention limitation of warranty, while Jorgensen's quotation had contained a limitation of liability clause. Noting that the quotation contained all the terms necessary to constitute a contract, the Hawaii Supreme Court found that the quotation was an offer that was accepted by Mark's issuance of its purchase order. The court pointed out that U.C.C. § 2-207(2) [26] did not come into play, since there were no additional terms or conflicting or different terms in Mark's purchase order. The court went on to state, Issuance of the purchase order objectively manifested Mark's acceptance of and assent to all terms proposed by Jorgensen. Mark's silence was not an effective rejection or a counteroffer. The limitation of warranty and liability provision was a part of the contract between the parties. 540 P.2d at 983. In this case, as in Jorgensen, the proposal contained all the terms necessary to constitute a contract. It was not a casual communication. The fact that the written proposal was submitted at Christianson's request following a quotation by telephone suggests it was an offer rather than merely a conveyance of price information, since the price information had already been communicated by telephone. In the letter of August 2, 1973, and in the telephone call which preceded the letter, Christianson was silent as to liability terms. At that point, as in Jorgensen, the only document that had discussed limitation of liability was the offeror's proposal. Although Christianson stated that a purchase order would follow, a purchase order was never sent, and no objection was ever made to the limitation of liability portions of the proposal. Our view also finds support in Construction Aggregates Corp. v. Hewitt-Robins, Inc., 404 F.2d 505 (7th Cir.1968), cert. denied, 395 U.S. 921, 89 S.Ct. 1774, 23 L.Ed.2d 238 (1969). In that case the court found that, where the seller made a counteroffer in response to an offer to buy and the buyer subsequently objected to only one term of the counteroffer, the buyer had acquiesced in the remaining terms of the counteroffer. 404 F.2d at 510. Similarly, Christianson, in the August 2 telephone conversation, negotiated modifications of certain terms in the proposal but did not voice objections to the remaining terms. In so doing Christianson acquiesced in the remaining terms and those terms became part of the contract. The fact that the parties never discussed some of the terms does not preclude their becoming part of the contract. [27] The effect of AS 45.05.062(a) and (b) [28] is to form a contract based on the terms of the offeror, unless the offeree in response has proposed additional or different terms. See Barron & Dunfee, Two Decades of 2-207: Review, Reflection and Revision, 24 Clev.St.L.Rev. 171, 178 (1975). If Christianson had objections to any of the terms of the offer, it could have prevented those terms from becoming part of the contract by expressly making its acceptance of the offer conditional on Isaacson's assent to different terms, as provided for in AS 45.05.062(a). [29] Christianson also could have prevented the objectionable terms of the offer from becoming part of the contract by presenting Isaacson with a form, such as a purchase order, that included conflicting terms. AS 45.05.062(b). [30] Since Christianson did not manifest any objection to the terms printed on the back of Isaacson's proposal, those terms became part of the contract. [31] We therefore find that the Isaacson-Christianson contract included Isaacson's limitation of consequential damages clause. This finding, however, does not affect the damages actually awarded to Christianson by the trial court, since the trial court concluded that all of Christianson's damages were general rather than consequential. Although Isaacson on appeal argues that the trial court erred in classifying certain damages as general damages, we find that the issue is not properly before this court. Isaacson did not raise this point in either its original statement of points on appeal or its supplemental statement. Pursuant to Rule 9(e), Alaska R.App.P., we will not consider points not included in appellant's statement of points on appeal. Wetzler v. Wetzler, 570 P.2d 741, 742 n. 2 (Alaska 1977); Moran v. Holman, 501 P.2d 769, 770 n. 1 (Alaska 1972). Although our finding that the contract excluded recovery of consequential damages does not invalidate the award of damages to Christianson, this finding is dispositive of Christianson's contentions on appeal. On appeal Christianson challenges the trial court's disallowance of certain items of damages, but Christianson admits that the damages sought on appeal are consequential damages. Under the terms of the contract, as we have construed it, such damages are not recoverable. While we agree that there was evidence to support the trial court's finding that the contract called for delivery by a specific date, we conclude for the reasons discussed above that Isaacson's force majeure clause [32] became a part of the contract. This finding does affect the damages awarded to Christianson. First, this clause specifically lists strikes as excuses for performance. Therefore, to the extent that Isaacson's delivery was delayed due to the strike at its plant, the failure to perform is excused. Second, the clause does not list late delivery from a supplier as one of the events whose occurrence would exempt Isaacson from liability for failure to perform. The late delivery from Armco, however, could still excuse Isaacson's failure to perform, if late delivery by Armco constitutes a cause beyond the reasonable control of the seller, so as to come within the catch-all provision of the force majeure clause. [33] We therefore find it necessary to remand the case for a determination of whether Armco's late delivery to Isaacson was beyond Isaacson's reasonable control. If, on remand, it is determined that the late delivery from Armco does come within the force majeure clause, then, to the extent that Armco's delay was responsible for Isaacson's failure to ship to Christianson on time, Isaacson's failure is excused. Isaacson would then be liable to Christianson only to the extent that the late delivery was not caused either by the strike or by Armco's late delivery. If, on the other hand, the later delivery from Armco is determined not to come within the force majeure clause, Isaacson's failure to deliver on time is excused only to the extent that it was caused by the strike. On the record before us, we are unable to determine exactly what conclusion the trial court reached regarding the cause of Isaacson's delay. [34] On remand the court should prepare detailed findings of fact, based on the existing record, regarding the cause or causes of Isaacson's delay, so that damages may be imposed in accordance with this decision. On remand it will also be necessary for the court to make a new determination on the issue of attorney's fees. The court ordered that Armco pay the attorney's fees of both Christianson and Isaacson, but since we find that Armco is excused from liability, that order is necessarily reversed. Armco now presumably will be entitled to some reimbursement for its attorney's fees pursuant to Rule 82, Alaska R.Civ.P. Any award of fees between Isaacson and Christianson, of course, will depend on the determination of liability. AFFIRMED in part, REVERSED in part, and REMANDED for further proceedings in accordance with this decision.