## Facts

- Mobil Chemical Company (Mobil) submitted an order to Egan Machinery Co. (Egan) for a precoater.
- Mobil’s requisition/purchase order stated that it was “subject to conditions set forth in this order” and included this clause: “Important—this order expressly limits acceptance to terms stated herein, and any additional or different terms proposed by seller are rejected unless expressly agreed to in writing.”
- Mobil’s purchase order did not include any indemnification provision.
- Egan sent Mobil an order acknowledgment stating: “this offer is accepted on the condition that our Standard Conditions of Sale, which are attached hereto and made a part hereof, are accepted by you.”
- Egan’s attached Standard Conditions of Sale contained an indemnity clause requiring Mobil, under certain circumstances, to indemnify Egan against claims arising from accidents related to the precoater.
- Egan delivered the precoater, and Mobil accepted and used it.
- A Mobil employee was injured while using the precoater and obtained a monetary judgment against Egan.
- Egan’s insurer (American Mutual Insurance Company) paid $75,000 on a stipulated judgment, and Egan and the insurer sued Mobil seeking reimbursement based on the indemnity clause in Egan’s Standard Conditions of Sale.
- Mobil filed (and later renewed) a motion for summary judgment, arguing that the indemnity clause never became part of the parties’ contract under U.C.C. § 2-207.
- The magistrate judge recommended granting summary judgment to Mobil, and the district judge adopted, ratified, and affirmed that recommendation.

## Issues

1. Did the exchange of Mobil’s purchase order and Egan’s acknowledgment create a contract under U.C.C. § 2-207(1) even though Egan’s acknowledgment referenced additional terms?
2. If a contract was formed, did Egan’s indemnity clause become part of the contract under U.C.C. § 2-207(2) given Mobil’s express limitation of acceptance to the terms of its purchase order?

## Decision

- The court held that a contract was formed by the parties’ exchange of forms under U.C.C. § 2-207(1).
- The court held that Egan’s indemnity clause did not become part of the contract.
- The court granted Mobil’s renewed motion for summary judgment, rejecting Egan’s attempt to shift the employee-injury loss to Mobil via the added indemnity term.
- The district judge adopted, ratified, and affirmed the magistrate judge’s memorandum and order, entering judgment for Mobil.

## Legal Principles

- Under U.C.C. § 2-207(1), a definite and seasonable expression of acceptance forms a contract even if it states additional or different terms, unless the acceptance is expressly conditional on the other party’s assent to those terms.
- “Expressly conditional” language must clearly communicate that the offeree is unwilling to proceed unless the offeror agrees to the offeree’s additional or different terms; otherwise, the response is treated as an acceptance that proposes additional terms.
- Once a contract is formed under § 2-207(1), additional terms in the acceptance are evaluated under § 2-207(2).
- Between merchants, additional terms proposed in an acceptance do not become part of the contract if the offer expressly limits acceptance to the terms of the offer. U.C.C. § 2-207(2)(a).
- A purchase order that states it “expressly limits acceptance” and rejects any additional or different terms unless “expressly agreed to in writing” prevents incorporation of a seller’s added boilerplate term (such as indemnity) absent the buyer’s written agreement.

## Conclusion

The District of Connecticut treated Mobil’s purchase order as the offer and Egan’s acknowledgment as an acceptance that merely proposed additional terms. Because Mobil’s offer expressly limited acceptance to its stated terms and rejected additional terms unless agreed to in writing, Egan’s indemnity clause in its Standard Conditions of Sale never became part of the contract, and Mobil owed no contractual indemnification for the employee’s injury judgment paid by Egan and its insurer.


Egan Machinery Co. v. Mobil Chemical Co., 660 F. Supp. 35 (1986)