Subsection: The Battle of the Forms Introduction

A. The Battle of the Forms^[63]

Classical contract theory asserted that the terms of offer and acceptance must match. In real life it happens all too frequently that both parties use their own standard forms, which are in conflict.

When the classical conception of offer and acceptance is applied to this recurrent situation, problems arise and the legal status of many a deal may be called into question. This is a most undesirable result since businessmen, in the belief that a deal is on, frequently ignore .discrepancies between offer and acceptance or settle them in the course of performance.^[64] So long as both parties feel the contract is to their mutual advantage, no problem arises. But if one of the parties finds the contract unduly burdensome, he may be tempted to fall back on the common law rules of offer and acceptance in order to escape liability, even if the reason for denying the existence of a contract has nothing to do with the defective manifestation of assent. Poel v. Brunswick-Balke-Collender Co.,^[65] involving a sale of rubber, furnishes an excellent example. The "acceptance" of the defendant buyer asked for a confirmation that the plaintiff seller neglected to give. Nothing happened for many months, during which time the price of rubber rose. When the price suddenly dropped, the buyer used themirror-image or matching doctrine to successfully deny the existence of a contract.

To remedy this situation, trade associations have undertaken to work out standard forms that attempt to be "fair and acceptable" to both contracting parties. An ever-increasing number of such forms have appeared.^[66] To give a few examples: the American Institute of Architects has prepared forms covering many aspects of the building industry.^[67] (These forms contain arbitration clauses that have frequently been the source of problems.^[68]) A joint committee of the National Coal Association and the National Association of Purchasing Agents developed the Standard Coal Contract for use in the sale of such commodities as coal, fuel, oil, scrap iron, and steel.^[69] Finally, a substantial number of trade associations representing the principals in the "grey goods" trade (unfinished cloth coming from the loom) formulated the Worth Street Rules.

The Rules define trade terms and customs, contain technical specifications of quality and tolerances, provide rules for arbitration, and have a standard But the Salesnote.^[70]

But the trend towards uniformity has been only partially successful. The decision of the Supreme Court in Paramount Famous Players Corp v. United States, 282 U.S. 30 (1930), may have had a retarding influence. In that case an agreement among motion picture distributors who controlled 60 percent of the industry not to deal with exhibitions who did not sign a standard exhibition contract containing an arbitration clause was held to violate §1 of the Sherman Act.^[71]

To remedy the situation once and for all, the Uniform Commercial Code has introduced several sections designed to eliminate the shortcomings" of the classical mirror-image rule, to bring contract law into line with the expectations of those dealing with merchants,^[72] and to honor the belief of parties that a deal is on. Sections 1-201(10), 1-205, 2-204, 2-206, 2-209, 2-316.  The interpretation of §2-207 has been, as we shall see, particularly troublesome.^[73]

[63] L. Fuller & M. Eisenberg, Basic Contract Law 616 (4th ed. 1981); Baird & Weisberg, Rules, Standards and the Battle of the Forms: A Reassessment of Section 207, 68 Va. L. Rev. 1217 (1982).

[64] Matter of Doughboy Indus., Inc. (Pantasote Co.) 17 App. Div. 2d 216, 233 N.Y.2d 488 (1962); Dorton v. Collins & Aikman Corp., 453 F.2d 1161 (6th Cir. 1972)

[65] 216 N.Y. 310, 110 N.E. 619 (1915). Pound,  J., dissenting rearg. denied, 260 N.Y. 771, 111 N.E. 1998 (1916).

[66] For the lawmaking of private organizations, see 62 Harv. L. Rev. 1346 (1949).  A detailed discussion of government contracts and their standardization lies outside the scope of this casebook.  See Miller, Government Contracts and Social Control: A Preliminary Inquiry, 41 Va. L. Rev. 27 (1955).  For the interpretation of the standard “changed conditions” and termination clauses contained in government contracts, see Jefferson Construction Co. v. United States, 392 F.2d 1006 (Ct. Cl. 1968), cert. denied, 393 U.S. 842 (1968); G. L. Christian & Associates v. United States, 312 F.2d 418 (Ct. Cl. 1963), reh.denied, 320 F.2d 345 (1963), cert. denied, 375 U.S. 954 (1963).  For further information on the treatment of government contracts, see p. 14 supra.

[67] Johnstone & Hopson, Lawyers and Their Work 335-340 (1967); J. Sweet, Legal Aspects of Architecture and Engineering 919 (2d ed. 1977); McCormick, Representing the Owner in Contracting with the Architect and Contractor, 8 Forum 435 (173).

[68] See generally Sweet, supra note 67, at 563 et seq.  Architect approval clauses are also a source of conflict.  City of Midland v. Waller, 430 S.W.2d 473 (Tex. 1968), and Note following Jacob & Youngs, Inc. v. Kent, infra p. 1042.

[69] See Fuller & Eisenberg, supra note 63, at 617, 908-909.

[70] Id. at 908-909. On the effect of the incorporation clause on outsiders, see Level Export Corp. v. Wolz, Eakin and Co., 365 N.Y. 82, 11 N.E.2d 218 (1953).

[71] Fuller & Eisenberg, supra note 63, at 617, 531, 849.

[72] E.g., U.C.C. §2-316 (dealing with exclusion or modification of warranties): the language excluding or modifying the implied warranty of merchantability must use the word merchantability or in case of a writing must be conspicuous.  For the meaning of “conspicuous” see U.C.C. §1-201(10).  The subsection is however qualified by subsection (3).  Some statutes describe the size of type used in certain contracts or the use of plain language.  See, e.g., N.Y. Gen. Oblig. Law §5-702 (McKinney’s Supp. 1984); Mass. Gen. laws Ann. ch. 175, §2B (West Supp. 1985) (prescribing readability); Wis. Stat. Ann. §422.303(2) (West 1974).

[73] For the European counterpart of §2-207, see Uniform Law for the Formation of Contracts for the International Law of Sales of Goods, Art. 7.