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Butler Machine Tool v Ex-Cell-O Corporation [1979] 1 WLR 401 (CA)

Contract – Offer and acceptance – Terms and conditions

Facts

The plaintiffs offered to provide delivery of a machine tool for the price of £75,535. The delivery of the tool was set for 10 months, with the condition that orders only qualified as accepted once the terms in the quotation were met and prevailed over any of the buyer’s terms. The buyer responded to the offer with their own terms and conditions, which did not include the ‘price variation clause’ listed in the seller’s terms. This included a response section which required a signature and to be returned in order to accept the order. The sellers returned this response slip with a cover letter signalling that delivery would be in accordance with their original quotation. The tool was ready for delivery but the buyers could not accept delivery, for which the sellers increased the price which was in line with their initial terms. This was denied by the buyer and an action was brought by the seller to claim the cost of delay and interest.

Issue

The court at the first instance found in favour of the sellers and ordered for the buyers to pay the increased cost. The buyers appealed this decision. In the appeal, it was important for the court to establish at which point, and on which party’s terms the contract had been constructed.

Held

The court allowed the buyer’s appeal. The court found that the buyer’s order was not an acceptance of the initial offer from the seller but a counter-offer which the sellers had accepted by returning the signature section of the buyer’s letter. On this basis, the court found that the contract was completed without the price variation clause and therefore the seller could not increase the cost of the tool.


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