Idaho Power Co. v. Westinghouse Electric Corp.
596 F.2d 924 (9th Cir. 1979)
- Idaho Power sent an inquiry to Westinghouse about buying a voltage regulator. Westinghouse sent back a quote with some terms and conditions on the back, including a limitation of liability.
- Idaho Power sent a purchase order for the regulator with language saying that acceptance of the order trumped all previous agreements
- Basically, Idaho Power was implying that that only the provisions explicit in the purchase order were binding, they were not agreeing to Westinghouse’s limited liability provision.
- Westinghouse took the money and sent Idaho Power a regulator. After it was installed, it caught fire destroying some other machinery.
- Westinghouse replaced the regulator, but refused to pay for the damaged machinery.
- Idaho Power sued Westinghouse for damages, based on breach of contract and negligence.
- The Trial Court awarded summary judgment to Westinghouse based on the liability limitations on their form. Idaho Power appealed.
- The Appellate Court affirmed.
- The Appellate Court found that Idaho Power’s response to the quote was an acceptance even though additional terms were added.
- The Court also concluded that this acceptance was not conditional on any new or different terms. Idaho Power did not come right out and say that they weren’t accepting unless Westinghouse agreed to supersede all previous agreements.
- The Court considered whether Westinghouse’s disclaimer was part of the contract. The Court found that Idaho Power failed to contest Westinghouse’s disclaimer, and so the disclaimer gets into the contract under UCC §2-207(2).
- UCC §2-207 says that in commercial transactions, the common law the mirror image rule will not be used. Instead, a deviant acceptance is still treated as an acceptance as long as it is not expressly conditional on new and different terms.
- Basically, if you go ahead with the deal, the original contract is valid. If you want your own terms, you have to expressly reject the original contract and refuse to accept the goods until they accept your terms.
- According to UCC §2-207(2), if there is a dispute, the terms of the acceptance are the ones that will be applied, unless:
- The offer expressly limits acceptance to the original terms
- The new terms materially alter the deal,
- Notification of objection to the new terms is given, and
- One of the parties is not a merchant.