## Facts

- The Babcock & Wilcox Company (B&W) needed a catalyst for an emissions-control system it was designing and installing at a coal-fired power plant.
- In June 1999, B&W sent Hitachi America, Ltd. (Hitachi) a request for quotation for the design and supply of the catalyst.
- The parties exchanged proposals and revised terms through December 1999.
- On December 9, 1999, Hitachi sent B&W a detailed written proposal listing terms including price, delivery, payment, warranty provisions, and liability limitations, and it invited B&W to respond with questions or comments.
- The parties continued negotiating after the December 1999 proposal, including negotiating the price and other commercial terms.
- In June 2000, after terms were settled, B&W issued a June 15, 2000 purchase order to Hitachi.
- The purchase order stated it was an offer (not an acceptance) and included warranty language broader than the warranties in Hitachi’s 1999 proposal.
- No further negotiations occurred after the purchase order issued, and Hitachi shipped the catalyst in 2001.
- When performance issues later arose and Hitachi did not provide the remedies B&W sought, B&W sued for breach of contract and breach of warranties.
- The parties agreed a contract existed but disputed when it was formed and which document(s) supplied the controlling terms; both sides moved for partial summary judgment limited to contract formation and contract terms.

## Issues

1. Was Hitachi’s December 9, 1999 proposal an offer that B&W accepted by issuing its June 15, 2000 purchase order, triggering U.C.C. § 2-207 analysis for conflicting terms?
2. Or was B&W’s June 15, 2000 purchase order the offer that Hitachi accepted by shipping the catalyst, so that the purchase order’s terms governed?
3. Based on the contract-formation answer, which warranty, performance-guarantee, and liability-limitation provisions were included in the parties’ contract?

## Decision

- The court granted in part and denied in part both parties’ motions for partial summary judgment.
- The court held Hitachi’s December 1999 proposal was not a binding offer; it functioned as a quotation/proposal in a continuing negotiation.
- The court held B&W’s June 2000 purchase order constituted the operative offer.
- The court held Hitachi accepted B&W’s offer by performing—shipping the catalyst.
- Because the purchase order was the offer and acceptance occurred by shipment, the court rejected Hitachi’s effort to frame the dispute as a U.C.C. § 2-207 “battle of the forms” based on the theory that Hitachi’s proposal was the offer and the purchase order the acceptance.
- The court determined that the contract’s controlling terms came from the purchase order and any terms the parties actually agreed to, rather than from Hitachi’s proposal terms to the extent they conflicted with the purchase order’s express provisions.

## Legal Principles

- A seller’s price quotation or proposal is generally treated as an invitation to negotiate or to receive an offer, not as a firm offer, especially where it invites comments and negotiations continue on material terms.
- A buyer’s purchase order issued after negotiations—particularly one stating it is an “offer”—is commonly treated as the offer under U.C.C. Article 2.
- Shipment or other performance can operate as acceptance of an offer in a sale of goods when the offer invites acceptance by performance.
- When the buyer’s purchase order is the offer and the seller accepts by shipment, the purchase order’s express terms govern absent proof that different terms were separately agreed to or properly incorporated.
- U.C.C. § 2-207 is not applied on an “acceptance-with-different-terms” theory when the document claimed to be the initial offer is only a quotation/proposal rather than an offer.

## Conclusion

The court concluded that Hitachi’s December 1999 proposal did not form the contract as an offer; instead, B&W’s June 15, 2000 purchase order was the offer and Hitachi accepted it by shipping the catalyst in 2001. With that formation sequence, the controlling contract terms were supplied by B&W’s purchase order (and any mutually agreed terms), not by Hitachi’s proposal terms where they conflicted, leaving the remaining breach and warranty merits for later proceedings.


Babcock & Wilcox Co. v. Hitachi America, Ltd., 406 F. Supp. 2d 819 (2005)