Butler Machine Tool Co Ltd v Ex-Cell-O Corporation (England)...

Facts

• Butler Machine Tool Co Ltd sent Ex-Cell-O Corporation a quotation for the sale of a machine tool, including a price variation clause.
• Ex-Cell-O responded with an order using their own terms and conditions, omitting the price variation clause; the order featured a tear-off slip for acceptance.
• Butler signed and returned the tear-off slip, attaching a letter referencing their original quotation.
• Butler later attempted to enforce the price variation clause when manufacturing costs increased.
• Ex-Cell-O refused to pay the increased price, resulting in litigation to determine whose terms governed the contract.

Issues

1. Which party’s terms and conditions formed the contract when both exchanged differing terms (the 'battle of forms')?
2. Does the traditional offer and acceptance analysis (mirror image rule) or a more flexible approach apply in cases of competing terms?
3. Whether Butler could enforce the price variation clause despite Ex-Cell-O's omission of it in their order.

Decision

• The Court of Appeal determined that Ex-Cell-O's order constituted a counteroffer that terminated Butler's original offer.
• By signing and returning the tear-off slip, Butler accepted Ex-Cell-O's counteroffer; the accompanying letter was not a new counteroffer.
• The contract was therefore formed on Ex-Cell-O’s terms, excluding Butler's price variation clause.
• Lord Denning MR advocated a flexible approach, examining the entire exchange to identify material agreement, but this was not the majority view.
• The majority reaffirmed the traditional approach and the primacy of the final accepted terms, applying the 'last shot' doctrine.

Legal Principles

• The 'battle of forms' is resolved by applying traditional offer and acceptance principles; a counteroffer extinguishes the original offer (Hyde v Wrench (1840)).
• The 'mirror image' rule requires that acceptance must unconditionally match the offer to form a contract.
• The 'last shot' doctrine holds that the terms of the last document exchanged, if accepted by conduct, form the contract.
• Exceptions to the 'last shot' rule may be recognized if clear evidence shows both parties intended another arrangement.
• Later cases, such as Tekdata Interconnections Ltd v Amphenol Ltd [2009] EWCA Civ 1209, confirmed the traditional approach but noted exceptions can apply with clear common intention.

Conclusion

Butler Machine Tool Co Ltd v Ex-Cell-O Corporation established that, in cases involving competing standard terms, the contract is concluded on the terms of the final offer accepted by conduct—the 'last shot'. The decision reinforced traditional contract formation analysis, with minority support for a more flexible interpretative approach in commercial practice.