Seller Ltd ("Seller?) is a manufacturer and seller of lifting equipment. Buyer Ltd, ("Buyer?), provides heavy goods vehicle servicing. On 1 July 2006 Buyer requested a copy of Seller's brochure and this was sent by post and received by Buyer on 3 July 2006. Tom, a representative of Buyer called thge Seller and was put through to Max, Seller's Sales Director. Tom told Max that Buyer wished to purchase the "Hercules? hydraulic jack system which was specially designed to lift heavy goods vehicles and was priced in the brochure at £28,000. Max thanked Tom for his order and agreed that the Hercules maching would be manufactured and delivered to Buyer on 31 August 2006 at the listed price of £28,000.
[...] However, the request for the order to be submitted on Seller's standard order form contained in the brochure may be seen as an alteration of the terms offered (presumably Buyer's terms), thus as a counter-offer that causes Max's offer to lapse. Seller's readiness to be legally bound without further negotiation is reflected in Max stating that he would arrange for manufacturing to commence. Accordingly, although the form of Max's reply purported to be an acceptance, because it fundamentally differs from Buyer's offer (in particular due to the price escalation clause), it may be construed as a counter-offer and thus no agreement would have been reached at this stage. [...]
[...] It may be that Tom's statement merely purported to confirm the information presented in the brochure with the view of eventually making an offer, however it seems more likely that a reasonable person would think he intended to bind Buyer legally into the purchase of the Hercules. Accordingly, this appears to constitute a valid offer from Buyer. All that is required to create the contract is an unequivocal acceptance from Seller. The general principle is that the offeree must accept the exact and precise offer made to him and normally, communicate this acceptance to the offeror. [...]
[...] Seller may be entitled to claim the remaining balance of £2,800 if the contract was made on its terms thus incorporating the price escalation clause. To ascertain which terms apply, the precise moment at which agreement was reached needs to be clarify through the rule of offer and acceptance. The first ingredient of an agreement is a clear and unequivocal offer. An offer exists when one party (the offeror) makes clear to the other (the offeree) that he is ready to be legally bound without any further negotiation. [...]
[...] If Seller objected to the contract being made on Buyer's terms instead of its own terms, a reasonable person would expect him to communicate its objection by rejecting the counter-offer and eventually making a new counter-offer. Seller's conduct did not indicate an intention to reject the offer, instead the goods were delivered. The delivery of the Hercules could then be seen as the point at which the contract between the parties was formed. The situation between Buyer and Seller shows that in practice, offers and counter-offers happen quite frequently in business situations when each party is using standard documents in their negotiations. [...]
[...] It may be advanced in relation to Buyer's price stability clause that, by subjecting the contract to its own terms and conditions, Buyer introduced a difference to Seller's counter-offer, which was material that it would affect the price” and thus Buyer “ought not to take advantage of the difference unless he draws it specifically to the attention of [Seller]”. But a court is likely to find that notice was sufficiently given by Tom's covering letter stating that all orders are made ‘subject to Buyer's terms and conditions, a copy which is enclosed'. [...]
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