Facts
- DTE Energy Technologies, Inc. (DTE) was a Michigan corporation that negotiated to sell electric generator systems for use in a construction project at Hoag Memorial Hospital Presbyterian (Hoag) in California.
- Hoag’s general contractor instructed DTE to negotiate the sale through a project subcontractor rather than directly with Hoag.
- Briggs Electric, Inc. (Briggs), a California corporation, won the subcontract and became responsible for procuring the generator systems.
- On October 21, 2003, Briggs sent DTE a purchase order requesting generator systems; Briggs treated the purchase order as its offer.
- On November 10, 2003, DTE forwarded Briggs an email that DTE’s president had previously sent to Hoag, indicating DTE’s intent to accept the offer reflected in Briggs’s purchase order.
- On December 4, 2003, DTE sent Briggs an order acknowledgment. Attached were DTE’s standard terms, including a forum-selection clause requiring disputes to be resolved under Michigan law in a Michigan court.
- The forum-selection clause was not included in Briggs’s purchase order, and Briggs maintained it did not agree to that clause.
- After the parties’ dispute developed, DTE sued Briggs in Michigan for breach of contract seeking payment for generator systems (about $880,000).
- Briggs pursued dispute resolution in California, including a demand for mediation and an action in California seeking a declaration of the parties’ rights and obligations.
Issues
- Under U.C.C. § 2-207, was the parties’ contract formed by Briggs’s purchase order and DTE’s November 10 acceptance/conduct, or by DTE’s December 4 order acknowledgment containing standard terms?
- If the contract was formed before DTE sent its standard terms, did DTE’s forum-selection clause become part of the contract as an additional term, or was it excluded because it materially altered the agreement absent Briggs’s express assent?
- If the forum-selection clause was not part of the contract, could a Michigan court exercise personal jurisdiction over Briggs based on the remaining contacts?
Decision
- The court treated Briggs’s October 21 purchase order as the offer and concluded DTE accepted it before sending the December 4 order acknowledgment.
- The court characterized DTE’s December 4 acknowledgment and standard terms as a later written confirmation that proposed additional terms, including the forum-selection clause.
- The court held the forum-selection clause did not become part of the contract because it materially altered the agreement and Briggs did not expressly agree to it.
- Without an enforceable Michigan forum-selection clause, the court concluded Briggs’s Michigan-related contacts tied to the transaction were insufficient to support personal jurisdiction.
- The court dismissed DTE’s Michigan action.
Legal Principles
- Under U.C.C. § 2-207, a contract for the sale of goods may be formed by an offer and acceptance (including acceptance shown through communications or performance) even when later documents contain extra boilerplate terms.
- When merchants exchange forms, a later writing that confirms an already-formed deal generally operates as a confirmation; new boilerplate provisions are treated as “additional terms” analyzed under U.C.C. § 2-207(2).
- An additional term that would cause surprise or impose meaningful hardship—such as a clause shifting dispute resolution to a distant forum—may be a material alteration and does not become part of the contract without express agreement.
- A forum-selection clause that is not part of the parties’ contract cannot be used to supply consent to jurisdiction or to establish a contractual basis for litigating in the chosen forum.
- Personal jurisdiction requires sufficient forum-directed conduct by the defendant; a single out-of-state purchase transaction and related communications may be inadequate without more substantial ties.
Conclusion
The court concluded that the parties formed a contract based on Briggs’s purchase order and DTE’s earlier acceptance, making DTE’s later order acknowledgment a confirmation that added proposed terms. Because the Michigan forum-selection clause materially changed the bargain and lacked Briggs’s express agreement, it was not part of the contract; absent that clause, Briggs did not have enough Michigan contacts for personal jurisdiction, so the Michigan action was dismissed.