## Facts

- Step-Saver Data Systems, Inc. assembled and resold multi-user office computer systems using Wyse WY-60 terminals and “Multilink Advanced” software sold by The Software Link, Inc. (TSL).
- Step-Saver ordered copies of the software by telephone; TSL accepted the orders by phone and shipped promptly.
- The parties’ invoices addressed price, quantity, and shipping terms, but did not address warranty disclaimers or limits of liability.
- Each software package bore a “Limited Use License Agreement” stating that opening the package accepted additional terms, including disclaimers of express and implied warranties and limitations of liability; it also stated the buyer could reject by returning the package unopened for a refund.
- TSL twice asked Step-Saver to sign separate written agreements containing similar disclaimer terms; Step-Saver refused both times.
- After Step-Saver sold the systems, customers complained of instability and data corruption; Step-Saver sought technical help from Wyse and TSL.
- Step-Saver was sued by customers and then pursued indemnity and breach-of-warranty claims against Wyse and TSL.
- The district court treated the box-top license as controlling, held the disclaimers effective, and granted TSL a directed verdict on Step-Saver’s warranty claims.

## Issues

1. Whether the box-top license terms were part of the parties’ contracts under U.C.C. § 2-207 when the sales were concluded by telephone orders and shipment.
2. Whether the box-top license constituted a conditional acceptance under U.C.C. § 2-207(1), requiring Step-Saver’s express assent to form a contract.
3. Whether repeated shipments containing the box-top license created a course of dealing incorporating the license terms.
4. Whether the license’s warranty disclaimers and liability limitations were material alterations under U.C.C. § 2-207(2) and therefore excluded absent express assent.

## Decision

- The Third Circuit reversed the directed verdict for TSL on Step-Saver’s warranty claims and remanded those claims for further proceedings.
- The court held the box-top license terms did not become part of the parties’ contracts under U.C.C. § 2-207.
- The court affirmed the judgment in all other respects, including the resolution of other issues not warranting reversal.

## Legal Principles

- When parties form a sales contract during a telephone order and acceptance, terms first presented with the shipped goods are analyzed under U.C.C. § 2-207 as proposed additional terms, not as the contract’s controlling terms.
- A writing is a “conditional acceptance” under U.C.C. § 2-207(1) only if it clearly communicates an unwillingness to proceed absent assent to the additional terms; shipment and acceptance of payment despite the buyer’s refusal to sign similar terms is inconsistent with conditional acceptance.
- A course of dealing does not incorporate recurring packaged terms merely because the seller repeatedly includes them; incorporation requires evidence that both parties understood and treated those terms as part of their bargain.
- Between merchants, additional terms under U.C.C. § 2-207(2) do not enter the contract if they materially alter it; warranty disclaimers and strict limits on liability materially alter a contract that otherwise includes U.C.C. default warranties because they substantially shift the allocation of risk.
- Materially altering terms in a post-sale package insert or box-top notice require the other party’s express assent to become part of the agreement.

## Conclusion

The Third Circuit held that TSL’s box-top “Limited Use License Agreement” did not modify Step-Saver’s software purchase contracts formed by telephone orders, because the license was neither a conditional acceptance nor incorporated by course of dealing, and its warranty disclaimers and liability limitations were material alterations under U.C.C. § 2-207; the directed verdict for TSL on warranty claims was reversed and remanded, with the remainder affirmed.


Step-Saver Data Sys., Inc. v. Wyse Tech., 939 F.2d 91 (3d Cir. 1991)