## Facts

- Daitom, Inc., formed to implement a joint venture, planned a plant to manufacture dextro calcium pantothenate (Vitamin B-5) and retained an engineering firm to design the process and procure equipment.
- Pennwalt Corporation proposed selling two rotary vacuum dryers and sent a written proposal with equipment specifications and standard terms, including a clause requiring any action arising from the sale to be filed within one year of delivery.
- Daitom issued a purchase order matching the negotiated terms (equipment, price, shipment, payment) but containing its own boilerplate preserving all rights and remedies available at law.
- The dryers were delivered while the plant was under construction and were not installed and tested until more than one year after delivery.
- After commercial operation began, the dryers allegedly malfunctioned; Pennwalt attempted repairs without resolving the problems.
- Daitom sued for breach of express and implied warranties and for negligent design and manufacture; Pennwalt sought summary judgment based on the one-year limitation and other defenses.
- The district court granted summary judgment for Pennwalt on all claims as time-barred; Daitom appealed.

## Issues

1. Under UCC § 2-207, whether Pennwalt’s one-year contractual limitation period became part of the parties’ contract despite conflicting boilerplate in Daitom’s purchase order.
2. Whether summary judgment was proper on the warranty claims based on enforcement of the one-year limitation rather than the UCC § 2-725 default four-year period.
3. Whether summary judgment was proper on the negligent design and manufacture claim in a commercial transaction seeking recovery for defective product performance.

## Decision

- The Tenth Circuit reversed summary judgment on the express and implied warranty claims and remanded for further proceedings.
- The court held it could not be determined as a matter of law, on the summary-judgment record, that the parties agreed to the one-year limitation clause.
- The court affirmed summary judgment for Pennwalt on the negligence claim.

## Legal Principles

- Under UCC § 2-207, agreement on negotiated terms can form a contract even when the parties’ forms contain conflicting boilerplate; disputed boilerplate is analyzed as proposed additional/different terms and may not become part of the contract without the conditions in § 2-207(2) being satisfied.
- A clause shortening the UCC § 2-725 four-year limitations period to one year materially affects a buyer’s legal rights and generally requires clear proof of agreement or express assent before it can be enforced.
- When buyer and seller forms contain directly conflicting boilerplate on remedies/limitations, incorporation of the seller’s adverse term may present factual and legal questions not suitable for summary judgment.
- In a commercial sale of goods, tort claims for negligent design/manufacture seeking recovery for economic loss associated with product performance may be displaced by contract and warranty remedies, supporting dismissal of an independent negligence count on the presented record.

## Conclusion

The court held that enforcing a seller’s one-year limitations clause contained in standard terms was improper on summary judgment where the buyer’s purchase order contained conflicting boilerplate and the record did not clearly show agreement; the warranty claims were remanded, while the negligence claim was affirmed as barred in substance as an economic-loss dispute governed by the UCC framework.


Daitom, Inc. v. Pennwalt Corp., 741 F.2d 1569 (10th Cir. 1984)