## Facts

- Hoeganaes Corporation operated an industrial furnace and sought to convert it for a new production process requiring a powder-transport (“dense phase”) system.
- Rage Engineering, Inc. submitted a written proposal to sell the system; the proposal incorporated Rage’s printed “Terms and Conditions of Sale,” including an indemnity clause favoring Rage.
- Hoeganaes issued a purchase order expressly subject to Hoeganaes’s own printed terms and conditions, including an indemnity clause favoring Hoeganaes and conflicting with Rage’s clause.
- The competing boilerplate terms, including indemnity provisions, were not negotiated or discussed; the parties proceeded with performance and the sale.
- About three years later, Hoeganaes employee Jeffrey Richardson was injured in a furnace explosion and sued multiple defendants, including Rage and Hoeganaes.
- Rage filed a cross-claim against Hoeganaes seeking contractual indemnification for Richardson’s claims.
- The trial court granted summary judgment to Hoeganaes, dismissing Rage’s indemnification cross-claim; Rage appealed.

## Issues

1. Under New Jersey’s version of U.C.C. § 2-207, how are directly conflicting terms in exchanged forms treated when the parties’ conduct recognizes a contract despite the writings not matching?
2. Specifically, do conflicting indemnity clauses in a seller’s proposal and a buyer’s purchase order become part of the contract, or are they removed under the “knock-out rule”?
3. If conflicting indemnity clauses are removed, does the U.C.C. supply any default term that creates contractual indemnification for personal-injury claims?

## Decision

- The Appellate Division affirmed summary judgment for Hoeganaes and dismissal of Rage’s cross-claim.
- The court adopted the U.C.C. “knock-out rule” in New Jersey for contracts governed by § 2-207 when forms contain conflicting terms.
- Because the indemnity provisions in the parties’ forms directly conflicted, neither indemnity clause became part of the contract.
- With the indemnity clauses removed, no U.C.C. supplementary term supplied an indemnification obligation; therefore, Hoeganaes owed no contractual indemnity to Rage for Richardson’s lawsuit.

## Legal Principles

- When the parties’ writings do not otherwise establish a contract but their conduct recognizes one, U.C.C. § 2-207(3) limits the contract to terms on which the writings agree, plus any U.C.C. supplementary terms.
- Under the knock-out rule, directly conflicting boilerplate terms in exchanged forms are excluded from the contract rather than choosing one side’s term.
- Conflicting indemnity clauses in buyer and seller forms are “knocked out” and neither governs absent a separately established agreement.
- The U.C.C. does not provide a default gap-filler term imposing indemnification for personal-injury losses in this sales context; removing conflicting indemnity clauses can leave the contract with no indemnification term at all.
- On summary judgment, the court evaluates the record with all favorable inferences for the non-moving party, but a claim fails where the governing U.C.C. analysis eliminates the contractual basis for relief.

## Conclusion

The court held that New Jersey applies the U.C.C. § 2-207 knock-out rule to conflicting terms in exchanged sales forms and, because the parties’ indemnity clauses were directly inconsistent and not otherwise agreed upon, no contractual indemnification obligation existed.


Richardson v. Union Carbide Indus. Gases, Inc., 347 N.J. Super. 524, 790 A.2d 962 (App. Div. 2002)