Facts
- Roto-Lith, Ltd. (Roto-Lith) manufactured cellophane bags, including “wet” bags intended to hold moisture-laden products.
- F.P. Bartlett & Co., Inc. (Bartlett) manufactured an emulsifier used in processing cellophane.
- Roto-Lith sent Bartlett a purchase order for Bartlett’s emulsifier, stating it was for use in making Roto-Lith’s wet cellophane bags.
- Bartlett responded with a written acknowledgment of the order that included additional printed terms.
- The acknowledgment contained a no-warranty clause disclaiming Bartlett’s responsibility if the emulsifier proved unsatisfactory for use in wet bags.
- The acknowledgment also told Roto-Lith to object promptly if it did not assent to the no-warranty clause.
- Roto-Lith did not object to the added no-warranty term.
- Bartlett shipped the emulsifier; Roto-Lith accepted delivery and paid for it.
- The emulsifier was intended for “dry” bag use and proved unsuitable for wet bags, causing Roto-Lith losses when its bags failed.
- Roto-Lith sued Bartlett in the U.S. District Court for the District of Massachusetts on warranty theories; Massachusetts law applying U.C.C. § 2-207 governed.
- The district court directed a verdict for Bartlett based on the disclaimer, and Roto-Lith appealed.
Issues
- Under U.C.C. § 2-207, did Bartlett’s acknowledgment containing a no-warranty clause operate as an acceptance (rather than a non-accepting counteroffer)?
- If a contract formed, did Bartlett’s no-warranty term become part of the parties’ contract when Roto-Lith received the acknowledgment, failed to object, and accepted and paid for the goods?
- If the no-warranty term was part of the contract, did it bar Roto-Lith’s warranty-based claims for the emulsifier’s unsuitability for wet bags?
Decision
- The First Circuit affirmed the directed verdict for Bartlett.
- The court treated Bartlett’s acknowledgment as accepting the order only on the stated terms, including the no-warranty clause.
- Because Roto-Lith received the acknowledgment, did not protest as requested, and then accepted and paid for the emulsifier, the court held Roto-Lith assented to the disclaimer.
- With the disclaimer in the contract, Bartlett was not liable on the asserted warranty theories for the emulsifier’s failure in wet-bag use.
Legal Principles
- Under U.C.C. § 2-207, an acknowledgment that responds to a purchase order can form a contract even though it contains additional or different terms.
- Where the seller’s acknowledgment makes clear that the transaction is offered only on the seller’s stated conditions, and the buyer receives that writing, fails to object, and accepts delivery, the buyer’s conduct can manifest assent to those conditions.
- A conspicuous no-warranty clause shifting the risk of unsuitability to the buyer can be enforced in a commercial sale when it is part of the contract and the buyer proceeds without timely objection.
Conclusion
Roto-Lith held that Bartlett’s acknowledgment—adding a no-warranty term and calling for prompt objection—became binding when Roto-Lith accepted delivery and paid without protesting, so the disclaimer was part of the contract under U.C.C. § 2-207 and defeated Roto-Lith’s warranty claims for the emulsifier’s unsuitability in wet cellophane bags.