Court Opinion

ID: 197294
Source: CourtListenerOpinion
Date Created: 2011-02-07 03:26:29+00
Date Added: 2024-06-11T13:11:27.167559
License: Public Domain

UNITED STATES COURT OF APPEALS
                      FOR THE FIRST CIRCUIT

                                           

No. 96-1554

                          IONICS, INC.,
                      Plaintiff - Appellee,

                                v.

                      ELMWOOD SENSORS, INC.,
                      Defendant - Appellant.

                                           

                           ERRATA SHEET

     The opinion of this court issued on April 8, 1997 is amended
as follows:

     Page 9, line 15 change "Roto-Lith's" to "Bartlett's"

     Page 12, line 8 insert period between "(1)" and footnote "5"

                  UNITED STATES COURT OF APPEALS
                      FOR THE FIRST CIRCUIT
                                           

No. 96-1554

                          IONICS, INC.,

                      Plaintiff - Appellee,

                                v.

                      ELMWOOD SENSORS, INC.,

                      Defendant - Appellant.

                                           

           APPEAL FROM THE UNITED STATES DISTRICT COURT

                FOR THE DISTRICT OF MASSACHUSETTS

       [Hon. Morris E. Lasker,* Senior U.S. District Judge]
                                                                    

                                           

                              Before

                     Torruella, Chief Judge,
                                                     

                  Bownes, Senior Circuit Judge,
                                                        

                    and Stahl, Circuit Judge.
                                                      

                                           

     Daryl J. Lapp, with whom Thane D. Scott, Stephen L. Coco and
                                                                       
Palmer & Dodge LLP were on brief for appellant.
                            
     Tina  M.  Traficanti,  with  whom  Anthony  M.  Doniger  and
                                                                      
Sugarman, Rogers,  Barshak  &  Cohen,  P.C.  were  on  brief  for
                                                     
appellee.

                                           

                          April 8, 1997
                                           

                    
                              

*  Of the Southern District of New York, sitting by designation.

          TORRUELLA,   Chief  Judge.    Ionics,  Inc.  ("Ionics")
                    TORRUELLA,   Chief  Judge.
                                             

purchased thermostats from Elmwood  Sensors, Inc. ("Elmwood") for

installation  in  water dispensers  manufactured  by  the former.

Several  of  the  dispensers  subsequently  caused   fires  which

allegedly  resulted from defects  in the  sensors.   Ionics filed

suit  against Elmwood in order  to recover costs  incurred in the

wake  of  the fires.   Before  trial,  the district  court denied

Elmwood's  motion for  partial  summary judgment.   The  District

Court of Massachusetts subsequently  certified to this court "the

question whether, in the  circumstances of this case,    2-207 of

M.G.L. c. 106 has been properly applied."   Order of the district

court, November 6, 1995.

                      I.  Standard of Review
                                I.  Standard of Review

          We  review the grant  or denial of  summary judgment de
                                                                           

novo.  See Borschow  Hosp. & Medical Supplies v.  C sar Castillo,
                                                                           

Inc., 96 F.3d 10, 14 (1st Cir. 1996).
              

                         II.  Background
                                   II.  Background

          The  facts of  the case  are not  in dispute.   Elmwood

manufactures and sells  thermostats.  Ionics  makes hot and  cold

water dispensers, which  it leases  to its customers.   On  three

separate occasions, Ionics purchased thermostats from Elmwood for

use in its water dispensers.1  Every  time Ionics made a purchase

of  thermostats from Elmwood, it sent the latter a purchase order

form which  contained, in small  type, various "conditions."   Of

the20 conditions onthe order form,two areof particular relevance:
                    
                              

1  Orders were placed in March, June, and September 1990.

                               -2-

            18.    REMEDIES -- The  remedies provided
            Buyer herein shall  be cumulative, and in
            addition to any  other remedies  provided
            by law or equity.   A waiver of  a breach
            of   any   provision  hereof   shall  not
            constitute a waiver of any  other breach.
            The  laws of the  state shown  in Buyer's
            address printed  on the masthead  of this
            order  shall  apply  in the  construction
            hereof.

            19.    ACCEPTANCE  --  Acceptance  by the
            Seller of  this order  shall be upon  the
            terms and conditions set forth in items 1
            to  17 inclusive,  and elsewhere  in this
            order.   Said  order  can be  so accepted
            only on  the exact  terms herein  and set
            forth.  No terms  which are in any manner
            additional  to  or  different from  those
            herein set  forth shall become a part of,
            alter or in any way control the terms and
            conditions herein set forth.

          Near  the time when  Ionics placed its  first order, it

sent Elmwood a letter that it  sends to all of its new suppliers.

The letter states, in part:

            The   information   preprinted,   written
            and/or  typed  on our  purchase  order is
            especially important  to us.   Should you
            take   exception  to   this  information,
            please  clearly express  any reservations
            to us in writing.  If you do not, we will
            assume  that  you  have  agreed   to  the
            specified terms and that you will fulfill
            your   obligations   according   to   our
            purchase  order.   If necessary,  we will
            change  your invoice and pay your invoice
            according to our purchase order.

          Following receipt  of each order, Elmwood  prepared and

sent an  "Acknowledgment" form containing the  following language

in small type:

            THIS WILL ACKNOWLEDGE RECEIPT  OF BUYER'S
            ORDER AND STATE  SELLER'S WILLINGNESS  TO
            SELL THE GOODS ORDERED BUT ONLY UPON  THE
            TERMS AND CONDITIONS SET FORTH HEREIN AND

                               -3-

            ON   THE   REVERSE  SIDE   HEREOF   AS  A
            COUNTEROFFER.   BUYER SHALL BE  DEEMED TO
            HAVE ACCEPTED SUCH COUNTEROFFER UNLESS IT
            IS  REJECTED IN  WRITING WITHIN  TEN (10)
            DAYS  OF  THE  RECEIPT  HEREOF,  AND  ALL
            SUBSEQUENT  ACTION  SHALL BE  PURSUANT TO
            THE   TERMS   AND   CONDITIONS  OF   THIS
            COUNTEROFFER  ONLY;   ANY  ADDITIONAL  OR
            DIFFERENT  TERMS  ARE HEREBY  OBJECTED TO
            AND SHALL NOT BE BINDING UPON THE PARTIES
            UNLESS SPECIFICALLY AGREED TO  IN WRITING
            BY SELLER.

          Although  this passage refers  to a  "counteroffer," we

wish to emphasize  that this  language is not  controlling.   The

form   on   which   the   language   appears   is   labelled   an

"Acknowledgment"  and the  language  comes under  a heading  that

reads "Notice of Receipt of Order."  The form, taken  as a whole,

appears  to contemplate  an order's  confirmation rather  than an

order's rejection in the form of a counteroffer.

          It  is undisputed that  the Acknowledgment was received

prior  to the  arrival of  the shipment  of goods.   Although the

district court,  in its ruling  on the  summary judgment  motion,

states that "with each  shipment of thermostats, Elmwood included

an Acknowledgment Form," Order of the District  Court, August 23,

1995, this statement cannot  reasonably be taken as a  finding in

support of the  claim that  the Acknowledgment  and the  shipment

arrived together.   First, in its certification order,  the court

states that "[t]he purchaser, after receiving the Acknowledgment,
                                             

accepted  delivery  of  the  goods  without  objection."    Order

Pursuant to 28 U.S.C.    1292(b), Nov. 6, 1995  (emphasis added).

This  language is  clearer  and more  precise  than the  previous

statement and suggests that  the former was simply a  poor choice

                               -4-

of phrasing.   Furthermore, Ionics has  not disputed the  arrival

time  of the  Acknowledgment.   In its  Memorandum in  Support of

Defendant's Motion for  Partial Summary Judgment Elmwood  stated,

under the heading  of "Statements of Undisputed Facts," that "for

each  of the  three  orders, Ionics  received the  Acknowledgment

prior to receiving the  shipment of thermostats."  Memorandum  in

Support of Defendant's Motion for Partial Summary Judgment, at 3.

In  its own memorandum, Ionics argued that there existed disputed

issues of material  fact, but did not  contradict Elmwood's claim

regarding  the   arrival  of   the  Acknowledgment  Form.     See
                                                                           

Plaintiff's  Memorandum   in   Support  of   its  Opposition   to

Defendant's  Motion   for  Partial  Summary   Judgment  at  4-10.

Furthermore,  in its appellate brief,  Ionics does not argue that

the time of  arrival of  the Acknowledgment Form  is in  dispute.

Ionics  repeats  language  from   the  district  court's  summary

judgment ruling that "with  each shipment of thermostats, Elmwood

included an Acknowledgment Form," Appellee's Brief at 7, but does

not argue that the issue  is in dispute or confront  the language

in Elmwood's brief which states that "[i]t is undisputed that for

each  of the  three  orders, Ionics  received the  Acknowledgment

prior  to receiving  the shipment  of thermostats."   Appellant's

Brief at 6.

          As  we have  noted, the  Acknowledgment Form  expressed

Elmwood's  willingness  to   sell  thermostats   on  "terms   and

conditions" that the  Form indicated were  listed on the  reverse

                               -5-

side.  Among the terms and conditions listed on the  back was the

following:

            9. WARRANTY
               All  goods   manufactured  by  Elmwood
            Sensors, Inc. are  guaranteed to be  free
            of  defects  in material  and workmanship
            for a  period of ninety  (90) days  after
            receipt  of  such   goods  by  Buyer   or
            eighteen   months   from   the  date   of
            manufacturer [sic] (as  evidenced by  the
            manufacturer's   date   code),  whichever
            shall be  longer.   THERE  IS NO  IMPLIED
            WARRANTY OF MERCHANTABILITY AND  NO OTHER
            WARRANTY,  EXPRESSED  OR IMPLIED,  EXCEPT
            SUCH  AS IS  EXPRESSLY SET  FORTH HEREIN.
            SELLER   WILL  NOT  BE   LIABLE  FOR  ANY
            GENERAL,   CONSEQUENTIAL   OR  INCIDENTAL
            DAMAGES, INCLUDING WITHOUT LIMITATION ANY
            DAMAGES  FROM LOSS  OF PROFITS,  FROM ANY
            BREACH  OF  WARRANTY  OR FOR  NEGLIGENCE,
            SELLER'S LIABILITY  AND BUYER'S EXCLUSIVE
            REMEDY  BEING  EXPRESSLY  LIMITED TO  THE
            REPAIR  OF  DEFECTIVE  GOODS  F.O.B.  THE
            SHIPPING  POINT  INDICATED  ON  THE  FACE
            HEREOF  OR THE REPAYMENT  OF THE PURCHASE
            PRICE UPON THE RETURN OF THE GOODS OR THE
            GRANTING  OF  A  REASONABLE ALLOWANCE  ON
            ACCOUNT OF  ANY  DEFECTS, AS  SELLER  MAY
            ELECT.

          Neither party  disputes that they entered  into a valid

contract  and  neither  disputes  the  quantity   of  thermostats

purchased,  the price paid, or  the manner and  time of delivery.

The only issue in dispute is the extent of Elmwood's liability.

          In  summary, Ionics'  order  included language  stating

that  the contract  would be  governed exclusively  by  the terms

included  on the purchase  order and that  all remedies available

under state law would  be available to Ionics.   In a  subsequent

letter, Ionics added that Elmwood must indicate any objections to

these  conditions in writing.   Elmwood, in turn,  sent Ionics an

                               -6-

Acknowledgment stating that the contract was governed exclusively

by the terms in the Acknowledgment, and Ionics was given ten days

to reject this "counteroffer."   Among the terms included  in the

Acknowledgment is a  limitation on Elmwood's  liability.  As  the

district court  stated, "the  terms are diametrically  opposed to

each other on the issue of whether all warranties  implied by law

were  reserved or waived."   Order of the  District Court, August

23, 1995.

          We face, therefore,  a battle  of the forms.   This  is

purely a  question of  law.   The dispute  turns  on whether  the

contract is governed  by the  language after  the comma  in    2-

207(1) of the Uniform Commercial Code, according to the rule laid

down by this court in Roto-Lith, Ltd. v. F.P. Bartlett & Co., 297
                                                                      

F.2d 497 (1st Cir. 1962), or whether it is governed by subsection

(3) of  the Code  provision, as  enacted  by both  Massachusetts,

Mass.  Gen. L. ch. 106,   2-207  (1990 and 1996 Supp.), and Rhode

Island, R.I. Gen. Laws    6A-2-207 (1992).2  We find the  rule of

Roto-Lith  to be in conflict  with the purposes  of section 2-207
                   

and, accordingly, we overrule  Roto-Lith and find that subsection
                                                  

(3) governs the contract.3   Analyzing the case under  section 2-
                    
                              

  There  is   some  uncertainty   on  the  question   of  whether
Massachusetts or Rhode Island  law governs.  We need  not address
this issue, however, because the two states have adopted versions
of  section  2-207  of  the  Uniform  Commercial  Code  that  are
virtually equivalent.

  Although panel  decisions of this court  are ordinarily binding
on  newly  constituted  panels,  that  rule does  not  obtain  in
instances where, as here, a departure is compelled by controlling
authority  (such as  the interpreted  statute  itself).   In such
relatively rare instances, we  have sometimes chosen to circulate

                               -7-

207, we conclude that Ionics defeats Elmwood's motion for partial

summary judgment.

                       III.  Legal Analysis
                                 III.  Legal Analysis

          Our analysis  begins with  the statute.   Section 2-207

reads as follows:

              2-207.   Additional Terms in Acceptance
            or Confirmation

            (1)  A definite and seasonable expression
            of acceptance or  a written  confirmation
            which  is sent  within a  reasonable time
            operates as an  acceptance even though it
            states terms additional  to or  different
            from those offered or agreed upon, unless
            acceptance is  expressly made conditional
            on assent to the additional  or different
            terms.

            (2)   The  additional or  different terms
            are  to be  construed  as  proposals  for
            addition  to  the   contract.     Between
            merchants  such terms become  part of the
            contract unless:
               (a)    the  offer expressly  limits
               acceptance  to  the  terms  of  the
               offer;
               (b)  they materially alter it; or
               (c)  notification  of objection  to
               them has already  been given or  is
               given  within   a  reasonable  time
               after notice of them is received. 

            (3)    Conduct   by  both  parties  which
            recognizes the existence of a contract is
                    
                              

the  proposed overruling  opinion to  all  active members  of the
court  prior  to publication  even  though the  need  to overrule
precedent is reasonably clear.  See, e.g., Wright v. Park, 5 F.3d
                                                                   
586, 591 n.7 (1st  Cir. 1994); Trailer Marine Transport  Corp. v.
                                                                        
Rivera  V zquez,  977  F.2d  1, 9  n.5  (1st  Cir.  1992).   This
                         
procedure  is,  of  course, informal,  and  does  not  preclude a
suggestion of rehearing  en banc on any issue.   We have followed
that praxis here and can report that none of the active judges of
this  court  has  objected to  the  panel's  analysis  or to  its
conclusion that Roto-Lith has  outlived its usefulness as circuit
                                   
precedent.

                               -8-

            sufficient  to  establish a  contract for
            sale although the writings of the parties
            do  not  otherwise establish  a contract.
            In  such case the terms of the particular
            contract consist of  those terms on which
            the  writings  of   the  parties   agree,
            together  with  any  supplementary  terms
            incorporated  under any  other provisions
            of this chapter.

Mass. Gen. L. ch. 106,   2-207 (1990 and 1996 Supp.).

          In  Roto-Lith,  Roto-Lith  sent  a  purchase  order  to
                                 

Bartlett,  who responded  with  an  acknowledgment that  included

language purporting to limit Bartlett's liability.  Roto-Lith did

not object.  Roto-Lith, 297 F.2d at 498-99.  This court held that
                                

"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.'"   Id. at 500.   This holding  took the
                                          

case outside of section 2-207 by applying the exception after the

comma in subsection  (1).  The court then reverted  to common law

and concluded  that Roto-Lith "accepted the  goods with knowledge

of the  conditions specified in the  acknowledgment [and thereby]

became bound."  Id. at 500.  In other words,  the Roto-Lith court
                                                                     

concluded  that  the defendant's  acceptance  was conditional  on

assent,   by  the  buyer,  to  the   new  terms  and,  therefore,

constituted  a counter  offer rather  than an  acceptance.   When

Roto-Lith  accepted  the  goods   with  knowledge  of  Bartlett's

conditions,  it  accepted the  counteroffer and  Bartlett's terms

governed the contract.  Elmwood argues that Roto-Lith governs the
                                                               

                               -9-

instant   appeal,   implying   that  the   terms   of   Elmwood's

acknowledgment govern.

          Ionics claims that the instant  case is distinguishable

because  in Roto-Lith "the  seller's language limiting warranties
                               

implied  at law was  proposed as an  addition to, but  was not in

conflict  with, the explicit terms of  the buyer's form.  [In the

instant case] the explicit  terms of the parties'  forms conflict

with and reject each other."  Appellee's Brief at 21.

          We do  not believe  that Ionics'  position sufficiently

distinguishes  Roto-Lith.   It  would  be  artificial to  enforce
                                  

language  that  conflicts  with  background  legal   rules  while

refusing  to enforce  language  that conflicts  with the  express

terms  of the contract.  Every contract is assumed to incorporate

the existing legal norms that  are in place.  It is  not required

that every contract explicitly spell out the governing law of the

jurisdiction.  Allowing  later forms  to govern  with respect  to

deviations  from the background rules but not deviations from the

terms in  the contract  would imply  that only the  terms in  the

contract  could be relied upon.   Aside from  being an artificial

and arbitrary distinction, such a  standard would, no doubt, lead

parties  to include more of the background rules in their initial

forms, making forms  longer and more  complicated.  Longer  forms

would  be more difficult and  time consuming to  read -- implying

that  even  fewer forms  would be  read  than under  the existing

rules.  It is the failure of  firms to read their forms that  has

                               -10-

brought this case before us, and we do not wish  to engender more

of this type of litigation.

          Our inquiry,  however, is  not complete.   Having found

that we cannot distinguish  this case from Roto-Lith, we  turn to
                                                              

the Uniform  Commercial  Code, quoted  above.   A plain  language

reading of section 2-207 suggests that subsection (3) governs the

instant  case.   Ionics sent  an initial  offer to  which Elmwood

responded with its "Acknowledgment."   Thereafter, the conduct of

the parties established  the existence of a  contract as required

by section 2-207(3).

          Furthermore,  the case before  us is squarely addressed

in comment 6, which states:

            6.   If  no answer  is received  within a
            reasonable  time  after additional  terms
            are   proposed,  it  is   both  fair  and
            commercially sound to  assume that  their
            inclusion  has been  assented to.   Where
            clauses on confirming forms sent  by both
            parties  conflict[,]  each party  must be
            assumed  to  object to  a  clause of  the
            other   conflicting   with  one   on  the
            confirmation  sent  by  himself.    As  a
            result[,] the requirement  that there  be
            notice of  objection  which is  found  in
            subsection  (2) [of   2-207] is satisfied
            and the  conflicting terms do  not become
            part  of the contract.  The contract then
            consists   of    the   terms   originally
            expressly agreed  to, terms on  which the
            confirmations  agree, and  terms supplied
            by this Act.

Mass. Gen. L. ch.  106,   2-207, Uniform Commercial  Code Comment

6.  This  Comment addresses  precisely the facts  of the  instant

case.   Any  attempt at  distinguishing the  case before  us from

section 2-207 strikes us as disingenuous.

                               -11-

          We are faced, therefore, with a contradiction between a

clear precedent of this court, Roto-Lith, which suggests that the
                                                  

language after the comma in subsection (1) governs, and the clear

dictates  of the  Uniform  Commercial Code,  which indicate  that

subsection (3) governs.  It  is our view that the two  cannot co-

exist and  the case at  bar offers a graphic  illustration of the

conflict.   We  have, therefore,  no choice  but to  overrule our

previous  decision in Roto-Lith, Ltd. v. F.P. Bartlett & Co., 297
                                                                      

F.2d 497 (1st  Cir. 1962).   Our decision brings this  circuit in

line with the  majority view on  the subject and  puts to rest  a

case  that has  provoked considerable  criticism from  courts and

commentators and alike.4

           We  hold, consistent  with section 2-207  and Official

Comment 6, that where  the terms in two forms  are contradictory,

each  party is assumed to object to the other party's conflicting

clause.   As a result, mere acceptance  of the goods by the buyer

is  insufficient to infer consent to the seller's terms under the

language of  subsection (1).5  Nor  do such terms  become part of
                    
                              

  See, e.g.,  Step-Saver Data  Systems, Inc. v.  Wyse Technology,
                                                                          
939 F.2d  91, 101 (3d Cir.  1991); St. Charles Cable  TV, Inc. v.
                                                                        
Eagle  Comtronics, Inc., 687 F.  Supp. 820, 828  & n.19 (S.D.N.Y.
                                 
1988); Daitom  v. Pennwalt Corp.,  741 F.2d  1569, 1576-77  (10th
                                          
Cir. 1984); Luria Bros. v. Pietlet  Bros. Scrap Iron & Metal, 600
                                                                      
F.2d 103, 113 (7th Cir. 1979); Dorton  v. Collins & Aikman Corp.,
                                                                          
453 F.2d 1161,  1168 & n.5 (6th Cir. 1972);   ;  James J. White &
Robert S. Summers, 1 Uniform Commercial Code,   1-3, at 12, 16-17
(1995); Murray, Intention over Terms: An Exploration of UCC 2-207
&  New Section 60, Restatement  of Contracts, 37  Fordham L. Rev.
317, 329 (1969).

  See  also  Official Comment  3  ("If  [additional or  different
                     
terms] are such as materially to alter the original bargain, they
will  not be  included unless  expressly agreed  to by  the other

                               -12-

the  contract  under  subsection   (2)  because  notification  of

objection has  been given  by the  conflicting forms.   See    2-
                                                                     

207(2)(c).

          The   alternative  result,  advocated  by  Elmwood  and

consistent with Roto-Lith, would undermine the role of section 2-
                                   

207.   Elmwood  suggests that  "a seller's  expressly conditional

acknowledgment  constitutes  a counteroffer  where  it materially

alters  the terms proposed by  the buyer, and  the seller's terms

govern the  contract between the  parties when the  buyer accepts

and pays  for the goods."   Appellant's Brief at 12.   Under this

view, section 2-207 would no longer apply to cases in which forms

have been exchanged and subsequent disputes reveal that the forms

are contradictory.  That is, the last form would always govern.

          The purpose  of section 2-207, as  stated in Roto-Lith,
                                                                          

"was to modify the strict principle that a response not precisely

in accordance with the offer was a rejection and a counteroffer."

Roto-Lith,  297 F.2d at 500; see  also Dorton v. Collins & Aikman
                                                                           

Corp.,  453 F.2d  1161,  1165-66 (6th  Cir.  1972) (stating  that
               

section  2-207 "was  intended to  alter the  'ribbon-matching' or

'mirror'  rule of  common  law,  under  which  the  terms  of  an

acceptance  or confirmation were required to  be identical to the

terms of the offer").    Under the holding advocated  by Elmwood,

virtually any response that added to or altered the terms of  the

offer would be  a rejection and a counteroffer.   We do not think

                    
                              

party.").

                               -13-

that such a result is consistent with the intent of section 2-207

and we believe it to be expressly contradicted by Comment 6.

          Applied  to  this  case,   our  holding  leads  to  the

conclusion  that the  contract is  governed by  section 2-207(3).

Section 2-207(1) is inapplicable because Elmwood's acknowledgment

is conditional on assent to the additional terms.  The additional

terms do not become a part of the contract under section 2-207(2)

because notification of objection  to conflicting terms was given

on  the order  form and  because the  new terms  materially alter

those  in the  offer.    Finally,  the  conduct  of  the  parties

demonstrates the existence of a  contract, as required by section

2-207(3).   Thus, section 2-207(3)  applies and the  terms of the

contract are to be determined in accordance with that subsection.

          We conclude, therefore, that section  2-207(3) prevails

and  "the terms of the particular contract consist of those terms

on which the  writings of  the parties agree,  together with  any

supplementary terms incorporated  under any  other provisions  of

this chapter."  Mass. Gen. L. ch. 106,   2-207(3).

          The reality of modern commercial dealings, as this case

demonstrates, is that not all participants read their forms.  See
                                                                           

James J. White & Robert S. Summers, Uniform Commercial Code   1-3
                                                                     

at  6-7 (4th ed. 1995).  To  uphold Elmwood's view would not only

fly  in the face  of Official Comment  6 to section  2-207 of the

Uniform Commercial Code, and the overall purpose of that section,

it would also fly in the  face of good sense.  The sender  of the

last  form  (in  the  instant  case,  the  seller)  could  insert

                               -14-

virtually any conditions it  chooses into the contract, including

conditions  contrary to  those in  the initial  form.   The final

form,  therefore, would give its sender the power to re-write the

contract.   Under our holding  today, we at  least ensure that  a

party will not be held to terms that are directly contrary to the

terms it has included in its own form.  Rather than assuming that

a failure to object to the  offeree's conflicting terms indicates

offeror's   assent  to  those  terms,  we  shall  make  the  more

reasonable inference that  each party continues to  object to the

other's contradictory terms.  We think  it too much to grant  the

second form the power to contradict and override the terms in the

first form.

                               -15-

                         IV.  Conclusion
                                   IV.  Conclusion

          For  the reasons  stated herein,  the district  court's

order denying  Elmwood's motion  for partial summary  judgment is

affirmed  and  the case  is remanded  to  the district  court for
          affirmed                    remanded  
                                              

further proceedings.

                               -16-