## Facts

- Continental Insurance Company issued Oakley Fertilizer, Inc. a cargo/inland-marine policy covering shipments made in Oakley’s business.
- The policy’s coverage clause stated it applied to “all shipments for the Assureds own account or for the account of Owners of the cargo transported by the Assured which the Assured agrees to insure,” if that agreement was made before any known or reported loss or before/simultaneous with the vessel’s sailing.
- The policy excluded shipments insured by other parties and required Oakley to report shipments for coverage.
- Oakley negotiated to sell approximately 3,000 short tons of fertilizer to Ameropa North America for shipment by barge from New Orleans, Louisiana to Caruthersville, Missouri using a third-party carrier.
- Oakley sent Ameropa a written “sales contract” containing a term that title and risk of loss would transfer only after Oakley received “good funds” from Ameropa; the contract also stated that the buyer would assume responsibility for product insurance at that time.
- Ameropa did not sign or return Oakley’s sales contract. Instead, Ameropa emailed Oakley an electronically signed “purchase agreement” that included a different shipping/risk term: “FOB BARGE EX NEW ORLEANS.”
- The fertilizer was loaded onto barges in New Orleans.
- Before delivery to Missouri and before Oakley received payment, Hurricane Katrina damaged the cargo.
- Oakley submitted a claim to Continental for the damaged shipment.
- Continental denied coverage, contending that Ameropa’s “FOB” term controlled and that, under UCC § 2-207 (and Continental’s theory that § 2-207(3) governed), risk of loss had passed to Ameropa when the fertilizer was loaded, meaning the shipment was not “for [Oakley’s] own account” within the policy.
- Oakley sued Continental for coverage in the Circuit Court of St. Louis County; the trial court entered summary judgment for Continental.
- Oakley appealed.

## Issues

1. Under UCC § 2-207(1), did Ameropa’s purchase agreement operate as an acceptance of Oakley’s offer even though it contained a different risk-of-loss/shipping term?
2. If a contract was formed under UCC § 2-207(1), could Continental avoid coverage by treating the parties’ writings as “no contract” and applying UCC § 2-207(3) to supply different terms?
3. Did disputes about which risk-of-loss provision governed and whether the shipment was for Oakley’s “own account” create genuine issues of material fact that barred summary judgment on Continental’s cargo-policy coverage defense?

## Decision

- The Missouri Court of Appeals (Eastern District) reversed the trial court’s grant of summary judgment for Continental and remanded.
- The court held that Ameropa’s emailed purchase agreement constituted an acceptance under UCC § 2-207(1), even though it included a different risk-of-loss/shipping term.
- Because a contract existed under § 2-207(1), Continental’s reliance on § 2-207(3) (as though no contract had formed by the writings) was not a basis for summary judgment.
- Given the competing forms and their risk-of-loss language, and the policy’s limitation to shipments for Oakley’s own account (or cargo Oakley agreed to insure), the record did not permit judgment as a matter of law for Continental on whether the loss fell within coverage.

## Legal Principles

- Under UCC § 2-207(1), a definite and timely expression of acceptance can form a contract even if it states terms additional to or different from those in the offer, unless acceptance is expressly made conditional on assent to the new terms.
- When a contract is formed under § 2-207(1), § 2-207(3) (contract by conduct when writings do not otherwise establish a contract) does not control simply because the parties exchanged forms with nonmatching terms.
- Disputes about which risk-of-loss allocation governs may bear directly on whether goods were shipped for the insured’s account and therefore on cargo-policy coverage.
- Summary judgment is improper where the insurer’s right to judgment depends on unresolved factual or contractual questions and competing inferences can be drawn from the record.

## Conclusion

Oakley Fertilizer held cargo insurance with Continental and suffered storm damage to fertilizer shipped by barge after loading but before payment and delivery. Oakley’s offer and Ameropa’s acceptance used different risk-of-loss terms, and Continental denied coverage on the theory that risk had shifted to Ameropa and the shipment was not for Oakley’s account. The Missouri Court of Appeals reversed summary judgment for Continental, holding that a contract formed under UCC § 2-207(1) despite the differing term and that Continental could not obtain judgment as a matter of law by treating the case as governed by § 2-207(3); disputes about the governing risk-of-loss allocation and resulting coverage required further proceedings.


Oakley Fertilizer, Inc. v. Continental Insurance Co., 276 S.W.3d 342 (2009)