84-2-207. Additional terms in acceptance or confirmation. (1) A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms.
(2) The additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless:
(a) the offer expressly limits acceptance to the terms of the offer;
(b) they materially alter it; or
(c) notification of objection to them has already been given or is given within a reasonable time after notice of them is received.
(3) Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract. In such case the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of this act.
History: L. 1965, ch. 564, § 31; January 1, 1966.
KANSAS COMMENT, 1996
1. This section abolishes the common law mirror-image rule of offer and acceptance. Under that rule, an acceptance had to be the "mirror image" of the offer to form a contract. If the acceptance differed from the offer by adding or varying terms, the acceptance was treated as a counter-offer and no contract was formed. If the parties then performed the contract, a contract was formed on the terms contained in the counter-offer, which was accepted by performance. The Code departs from this rule in subsection (1), which provides that a definite and seasonable expression of acceptance—i.e., one that agrees on the bargained-for terms—forms a contract even if it contains additional or different terms. See Benson Mineral Group, Inc. v. Enron Gas Processing Co., 1991 U.S. Dist. LEXIS 1387 (D. Kan. 1991). No contract is formed, however, if the acceptance is expressly conditioned on the offeror's assent to the additional or different terms. Such an acceptance is a counteroffer, which then must be accepted by the original offeror. See Owens-Corning Fiberglas Corp. v. Sonic Dev. Corp., 546 F. Supp. 533 (D. Kan. 1982).
2. This section addresses not only whether a contract is formed but also what the terms of the resulting contract are. Terms contained in the offer but not in the acceptance become part of the contract because the offeree accepted the offer. If either party is not a merchant, terms contained in the acceptance but not in the offer ("additional terms") are proposals for addition to the contract that do not become part of the contract unless the original offeror expressly agrees. If both parties are merchants, however, subsection (2) provides that additional terms automatically become part of the contract unless the offer expressly limits the terms of the contract to those stated in the offer, the additional terms materially alter the contract, or the offeror objects to the additional terms within a reasonable time. Official Comments 4 and 5 to this section give examples of terms that do and do not materially alter the contract. See also Transamerica Oil Corp. v. Lynes, Inc., 723 F.2d 758 (10 th Cir. 1983) (applying Kansas law) (limitation of remedy is material alteration).
3. Courts and scholars differ widely on the status of terms in an acceptance that conflict with terms in the offer ("different terms"). Such terms are not within subsection (2), since that subsection deals only with additional terms. But see Official Comment 3 (referring to both different and additional terms). The majority of courts have concluded that the different terms cancel each other out, leaving the Article 2 gap fillers (if any) to provide the missing term. Kansas Comment 1983 favors this "knock-out" doctrine, but there is no clear answer yet to this question in Kansas. See Daitom, Inc. v. Pennwalt Corp., 741 F.2d 1569 (10 th Cir. 1984) (applying Pennsylvania law) (adopting knock-out doctrine).
4. If no contract is formed by the parties' writings (such as when acceptance is expressly made conditional upon the offeror's assent to the additional or different terms), subsection (3) recognizes that their conduct may nonetheless demonstrate that a contract exists. If so, the terms of the contract consist of those terms on which the writings of the parties agree, together with any Article 2 gap fillers. Although Kansas courts have not addressed the question, there is some authority that course of performance, usage of trade, and course of dealing can supplement a contract formed by performance under this subsection. See Dresser Indus., Inc. v. Gradall Co., 965 F.2d 1442 (7 th Cir. 1992).
5. For an excellent discussion of this difficult provision, see James J. White & Robert S. Summers, 1 Uniform Commercial Code § 1.3 (4 th ed. Practitioner Treatise Series 1995).
Law Review and Bar Journal References:
"Underlying Philosophy of Article 2," John E. Murray, Jr., 21 W.L.J. 1, 8 (1982).
"Deregulation and Natural Gas Purchase Contracts: Examination Through Neoclassical and Relational Contract Theories," Danton B. Rice, Michael A. Schlueter, 25 W.L.J. 43, 58, 59 (1985).
"Electronic Commerce in Kansas: Contract Formation and Formalities Under Article 2," Christopher R. Drahozal, 68 J.K.B.A. No. 5, 22 (1999).
CASE ANNOTATIONS
1. Meaning of statute discussed; held to be not germane to the facts of present case. Southwest Engineering Co., Inc. v. Martin Tractor Co., Inc., 205 Kan. 684, 694, 695, 473 P.2d 18.
2. Acceptance under (1) valid unless conditioned on assent to additional or different terms. Owens-Corning Fiberglas v. Sonic Dev. Corp., 546 F. Supp. 533, 539 (1982).
3. Material alteration considered; whether term materially alters contract under subsection (2)(b) is question of fact; provisions of invoice held relevant. Transamerica Oil Corp. v. Lynes, Inc., 723 F.2d 758, 765 (1983).
4. In applying Pennsylvania law, Kansas law held similar; damages from product's qualitative defects without proof of dangerousness cannot sound in tort. Daitom v. Pennwalt Corp., 741 F.2d 1569, 1581, (1984).
5. Summary judgment granted on claim reconditioner of surgical tools was guilty of helping hospitals violate patent. U.S. Surgical Corp v. Orris, Inc., 5 F. Supp. 2d 1201, 1205 (1998).
6. Purchaser did not accept standard terms and conditions agreement containing arbitration clause located in computer packaging. Klocek v. Gateway, Inc., 104 F. Supp. 2d 1332, 1341 (2000).
7. Under subsection (2) terms and conditions of July 15, 2002 letter became part of contract, attorney fees. Smith & Loveless, Inc. v. Caicos Corp., 471 F. Supp. 2d 1140, 1152 (D. Kan. 2007).
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