## Facts

- Northrop, a defense contractor, sought customized printed wire “1714 boards” from Litronic, an electronics manufacturer.
- Litronic sent Northrop a written quotation offering to supply the boards and included a warranty limited to 90 days from delivery.
- Northrop accepted by telephone and then sent its standard purchase order containing boilerplate warranty terms with no stated time limit for defects.
- Litronic manufactured and delivered the boards, and Northrop paid for them.
- Because testing was technically complex, Northrop did not complete testing until about five to six months after delivery.
- Northrop then determined many boards were defective and attempted to return them.
- Litronic refused the return, asserting the 90-day warranty period had expired; Northrop asserted its purchase order warranty allowed rejection later.
- Northrop sued in diversity for breach of contract and recovery of amounts paid; a magistrate judge entered judgment for Northrop (about $58,000) on the 1714 boards using a UCC “reasonable time” gap-filler.
- Both parties appealed.

## Issues

1. Under UCC § 2-207 in a merchant-to-merchant “battle of the forms,” how are directly conflicting (“different”) terms in an offer and an acceptance treated?
2. When a seller’s form limits warranty duration to 90 days and the buyer’s purchase order provides no time limit, does the contract incorporate one party’s term or neither?
3. If neither conflicting warranty term applies, was the buyer’s rejection of allegedly defective goods five to six months after delivery within a reasonable time?

## Decision

- The Seventh Circuit affirmed judgment for Northrop on the 1714 boards.
- The court held that directly conflicting warranty terms in the parties’ forms are both excluded from the contract under the “knock-out” approach to UCC § 2-207.
- The contract is instead supplemented by UCC gap-fillers, supplying a reasonable-time standard for performance and related actions.
- Applying that standard, Northrop’s rejection five to six months after delivery was timely given the complexity of the goods and testing.

## Legal Principles

- Under UCC § 2-207, a definite and seasonable acceptance can form a contract even though it contains terms additional to or different from the offer.
- When merchants exchange forms containing “different” (contradictory) terms, the “knock-out” rule excludes both conflicting terms and replaces them with UCC default provisions.
- Where the parties’ conduct recognizes a contract despite mismatched writings, UCC § 2-207(3) limits contract terms to those on which the writings agree, plus supplementary UCC terms.
- If contract writings do not supply a time term for required action, the UCC supplies a “reasonable time” standard (including via UCC § 2-309(1) and related reasonableness provisions).
- Reasonableness is fact-specific and may account for technical complexity and the time needed to test specialized goods.

## Conclusion

The court held that the parties’ conflicting boilerplate warranty durations were both excluded under UCC § 2-207 and replaced by UCC gap-fillers, and it upheld the finding that Northrop rejected the specialized boards within a reasonable time after completing complex testing.


Northrop Corp. v. Litronic Indus., 29 F.3d 1173 (7th Cir. 1994)