## Facts

- Arizona Retail Systems, Inc. (ARS) was a value-added retailer that configured and serviced multi-user computer systems for clients.
- The Software Link, Inc. (TSL) designed and sold software, including the PC-MOS operating system for multi-user access from a host computer.
- In 1987, ARS evaluated an earlier PC-MOS version but declined to buy due to performance concerns.
- In 1989, TSL sent ARS promotional materials describing an updated PC-MOS as operational and compatible as a multi-user operating system; ARS understood these statements to mean earlier problems had been fixed.
- TSL provided software to ARS in shrinkwrapped packaging bearing a license agreement that disclaimed implied warranties and included an integration clause.
- After initial testing and retention of the software, ARS made additional purchases by telephone, specifying product, quantity, and price; TSL accepted by phone and shipped the software.
- The telephone orders did not discuss the license terms; each shipment nevertheless included the same license agreement.
- ARS later encountered operational problems with PC-MOS and sued, asserting claims relying on implied warranties and alleged oral or promotional representations; TSL relied on the license’s disclaimers, limitations, and integration clause.

## Issues

1. Whether, when software is ordered and accepted by telephone and shipped with a shrinkwrap license, the license terms become part of the contract under UCC § 2-207.
2. Whether the shrinkwrap license effectively disclaimed implied warranties and barred proof of alleged pre-contract or contemporaneous oral representations through an integration clause.
3. Whether TSL was entitled to summary judgment that the license agreement supplied the exclusive remedies and foreclosed ARS’s claims as a matter of law.

## Decision

- The court denied TSL’s position that the shrinkwrap license, as a matter of law, exclusively governed and barred ARS’s warranty- and representation-based claims at the summary-judgment stage.
- The court treated the parties’ contracts as formed during the telephone transactions (offer and acceptance) before ARS received or read the license terms.
- The court characterized the shrinkwrap license as containing additional or different terms proposed after contract formation, governed by UCC § 2-207.
- The court concluded that warranty disclaimers and remedy limitations typically constitute material alterations under UCC § 2-207 and therefore do not become part of a merchant-to-merchant contract absent express assent.
- Because the license itself was not established as the final integrated agreement as a matter of law, the integration clause could not be used on summary judgment to exclude evidence of alleged oral representations.

## Legal Principles

- Under UCC § 2-207, when a contract is formed by prior agreement (including telephone offer and acceptance), later-delivered written terms are treated as proposals for additional or different terms, not automatically as the contract.
- Between merchants, proposed additional terms become part of the contract only if UCC § 2-207(2) conditions are met; material alterations generally require express assent.
- Warranty disclaimers, remedy limitations, and similar risk-shifting provisions are ordinarily material alterations and thus do not enter the contract through silence or retention of goods alone.
- An integration clause included in a later-delivered set of proposed terms cannot, without establishing that those terms became part of the contract, bar evidence of prior or contemporaneous representations on summary judgment.
- Summary judgment is inappropriate where the parties’ course of dealing, communications, and assent to post-formation terms present factual disputes relevant to contract terms and warranty or misrepresentation theories.

## Conclusion

The court treated the shrinkwrap license shipped with PC-MOS as proposed post-formation terms under UCC § 2-207, and—because the license’s disclaimers and integration clause were material and not shown to have been expressly accepted—refused to enforce them as a matter of law on summary judgment, allowing ARS’s implied-warranty and representation-based claims to proceed.


Arizona Retail Sys., Inc. v. Software Link, Inc., 831 F. Supp. 759 (D. Ariz. 1993)