## Facts

- Empire Machinery Co. sought to purchase and install an “interconnect” telephone system for its facilities.
- Litton Business Telephone Systems, through its national accounts manager, solicited Empire and negotiated system terms over several months.
- On July 30, 1973, Litton sent a letter stating that, upon receipt of a signed order and deposit, Litton would install a specified system and later replace it with a newer switching system when available.
- Empire’s president signed Litton’s printed “Equipment Sales Agreement” and paid a deposit of $8,546, which Litton accepted and deposited.
- The printed agreement included a “home office acceptance” clause providing the agreement would not be effective until approved, accepted, and executed in writing by Litton’s home office; no home-office representative signed.
- After the deposit, both parties acted as though a contract existed, including sending letters to the telephone service provider stating they had formed a “contractual relationship” for installation.
- At Litton’s request, Empire purchased about $12,000 in electrical equipment to support the planned installation.
- Litton personnel coordinated implementation steps, including requesting a new telephone number to be placed in service on a specified date.
- Litton ultimately did not ship or install the system, and Empire sued for breach of contract.

## Issues

1. Whether the absence of written home-office approval and execution under a “home office acceptance” clause conclusively prevented contract formation.
2. Whether the parties’ communications and performance created at least a triable fact question on mutual assent, making summary judgment improper.

## Decision

- The Court of Appeals reversed the grant of summary judgment for Litton and remanded.
- The court held that a home-office acceptance clause was not necessarily the exclusive means of forming a binding contract.
- The court concluded that the parties’ words and conduct could permit a factfinder to determine that a contract existed despite the lack of a home-office signature.
- Because reasonable inferences from the record could support contract formation, the existence of a contract could not be decided as a matter of law on summary judgment.

## Legal Principles

- Contract formation turns on objective manifestations of mutual assent as shown by the parties’ communications and conduct.
- A form clause requiring home-office approval may be treated as evidence of intent, but it is not automatically conclusive where subsequent conduct indicates the parties regarded themselves as bound.
- Where material facts or competing inferences exist on intent to contract, summary judgment is improper and the issue should be resolved by the trier of fact.

## Conclusion

The appellate court held that the parties’ post-agreement conduct and mutual representations could support a finding of contract formation notwithstanding an unsigned home-office acceptance clause, requiring reversal of summary judgment and remand for factfinding.


Empire Mach. Co. v. Litton Bus. Tel. Sys., 115 Ariz. 568, 566 P.2d 1044 (Ct. App. 1977)