Case Summary: Butler Machine Tool Co Ltd vs. Ex-Cell-O Corp (England) Ltd

THE BATTLE OF FORMS: Terms of Offer, Acceptance and Contracts

FACTS

23rd May 1969: The supplier of the machine, Butler Machine Tool Co Ltd (Plaintiff) quoted a price to the defendant, the buyer of the machine, Ex-Cello-O Corp, for £ 75,535. The delivery of the machine was to be made in 10 months. On the back of the quotation were some terms and conditions, including a price variation clause. The clause provided for an increase in price if there was an increase in costs and so forth.

27th May 1969: The buys replied in the affirmative. However, the terms of their contract differed from the terms of the 23rd offer, as an order was given to “supply on terms and conditions as below and overleaf”. As a result, there was an additional cost of installation at £3, 100, delivery date was 10-11 months, delivery was to be made at the buyer’s place instead, terms to right to cancellation differed- the buyers retained it if delivery was not made by agreed data whereas seller’s contract said it would not be acceptable. The buyer’s offer came with a tear-off slip of acknowledgement which was to be signed and returned to the sellers which constituted as an acceptance once signed. The date of delivery and signature was left blank for the sellers to fill.

5th June 1969: The sellers sent their reply. They accepted the offer, but stated delivery was to be in accordance with the official order dated 27th May. However, they did sign the acknowledgement slip after revising delivery dates to March/April 1970. The slip was already signed by the buyers. 

November 1970: The machine was delivered, though later. Due to price variations in this period, the cost of the machine had increased. However, the Ex Cello-O Crop refused the excess charge of £2, 892 by relying on their terms and conditions dated 27th May 1969 due to which Butler Machine Co sued them.

ISSUE

The issue of the case was whether a contract between the parties existed or not. If such a contract existed, on which terms of the offer were the contract based on?

ARGUMENTS

Majority of the judges in the Court of Appeals employed the traditional offer and acceptance analysis to determine there was no acceptance to the seller’s initial offer, dated 23rd May 1969.  Their reply dated 27th May 1969 was, in fact, a counteroffer since the terms differ, the price variation clause had been removed in their ‘acceptance’.  The sellers accepted this counter-offer by sending the acknowledgement slip back on  5th June which concluded the contract without the price variation clause. As a result, the judgement was in favour of buyers as the seller could not increase their price.

While Lord Denning MR also held in favour of the defendants, he used the ‘battle of the of the forms’ instead of the traditional approach.  He claimed the better approach was to glean from the all the documents which passed between the parties as well as well as their conduct to check whether they reached agreement on all material points inspite of any differences between the forms and conditions, citing Lord Cairns’s judgement in Brogden v. Metropolitan Railway (1877) .

Lord Denning said that the document on the 5th June, 1969 was the decisive document. This  states in clear terms that the contract is to be on the buyer’s and not the seller’s term, thereby establishing that was no agreement even on material terms of the offers. He concluded that since the determining document did not have the price variation clause, the case was in favour of the defendants- the buyers, Ex-Cello-O Corp.

HELD

The Court of Appeals held in favour of the buyers of defendants Ex Cell-O Corp, and the price variation clause was not upheld.

REFERENCES

[1] BAILI: http://www.bailii.org/cgi-bin/markup.cgi?doc=ew/cases/EWCA/Civ/1977/9.html&query=title(Butler%20machine%20tool%20and%20ex%20cell%20o%20)

[2] Multiple (Uknown). Butler Machine Tool Co Ltd v Ex-Cello-O Corp (England) Ltd. Machine Wikipedia. [edited 29 December 2019]: https://en.wikipedia.org/wiki/Butler_Machine_Tool_Co_Ltd_v_Ex-Cell-O_Corp_(England)_Ltd

[3] LawTeacher. Butler Machine Tool v Ex-Cell-O Corporation – 1979. LawTeacher.Net [November 2013].  https://www.lawteacher.net/cases/butler-machine-tool-v-ex-cell-o.php?vref=1 [Accessed 18 June 2020].

[4] Image Credits (Wikipedia): https://en.wikipedia.org/wiki/Butler_Machine_Tool_Co_Ltd_v_Ex-Cell-O_Corp_(England)_Ltd#/media/File:Skansen2.jpg