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17. As of June 5, when the retailer received the wholesale company's acceptance form, which of the following is an accurate statement concerning the legal relationship between the wholesale company and the retailer?
On June 1, a wholesale company received a purchase-order form from a retailer, in which the latter ordered 1,000 anti-recoil widgets for delivery no later than August 30 at a delivered total price of $10,000, as quoted in the wholesale company's current catalog. Both parties are merchants with respect to widgets of all types. On June 2, the wholesale company mailed to the retailer its own form, across the top of which the wholesale company's president had written, «We are pleased to accept your order.» This form contained the same terms as the retailer's form except for an additional printed clause in the wholesale company's form that provided for a maximum liability of $100 for any breach of contract by the wholesale company.
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Although as a general rule, an additional term will automatically be part of the contract, if the additional term materially alters the contract or the other party objects to the addition of the contract, it will not automatically be added to the final agreement. Whether an additional term «materially alters» the contract is decided on a case-by-case basis.
D is correct. Under the UCC, a written acceptance generally will operate as such even if it states additional or different terms. The additional or different terms, however, will not become part of the contract if they materially alter the contract, unless the offeror expressly agrees to them. Although the wholesale company's form contained a limitation-on-liability clause, the acceptance of the retailer's offer was effective. Because the contract price was $10,000, the clause limiting the wholesale company's liability to $100 proposes a material alteration to the contract and therefore will not become part of the contract, since the retailer did not expressly agree to it.
A is incorrect. What constitutes a «material alteration» of the contract is decided on a case-by-case basis. A material alteration will relate to the purpose of the agreement itself, so minor differences or alterations will not rise to the level of «material.» The wholesale company's acceptance is effective notwithstanding the existence of a material additional term.
B is incorrect. Under the UCC, parties to a contract generally do not need to consent to every provision of the contract before signing for the acceptance to be effective. As explained above, any material alteration will not become part of the contract if not expressly agreed to, but the acceptance will still be valid.
C is incorrect. Most often, the term «liquidated damages» appears in a contract, and often is the title for a whole clause or section. Parties to a contract use liquidated damages where actual damages, though real, are difficult or impossible to prove. The liability-limitation clause proposes a material alteration and thus will not become part of the contract.