Most floor covering dealers purchase goods from their suppliers by simply picking up the phone and placing the order with the customer service department of the selected mill. In many cases, the goods are immediately shipped out pursuant to this telephone order, without any written purchase order, confirmation or acknowledgment. Often, the only written document that refers to this order is the invoice which is mailed by the manufacturer to the retailer.

As we have all noticed, many of these invoices contain all kinds of clauses which are supposedly made as part of the contract of sale, for the goods referred to on the invoice, between the store owner and that mill. Some of these clauses state the liability of the manufacturer, in the event the goods are found to be defective, will be limited to replacement of the goods only. In other words, no labor, etc.

Limited Recourse

Other times, these clauses will limit the time within which a retailer may complain about the goods, or sue if his complaints go unanswered. Still, other clauses will limit a seller’s recourse to an arbitration proceeding, or otherwise concern the buyer’s obligation to pay for those goods.

Are these clauses, apparently unilaterally put in by the seller, really made a part of the agreement or are they merely wishful thinking by that seller who can then convince the dealer that he must be binding since it is on a printed form? Although there is no simple answer to this question, there are some general rules.

These rules are found in the Uniform Commercial Code, (UCC) the uniform body of the law of sales that is basically the same in all 50 states. This statute is where we look to get the rules if there is no agreement whatsoever. It also contains the rules that determine which written or oral, documents or statements are actually a part of the agreement and which ones are not.

Additional Terms

One of these rules states that a written confirmation of an order which is sent within a reasonable time of an offer, operates as acceptance of that offer even though it may contain terms that differ from the original proposition. These additional terms, if the sale is between merchants, become a part of the agreement unless: the offer expressly limits acceptance to the terms of the offer; they materially alter it, or they are immediately objected to after receipt of the confirmation.

To see how this works, we’ll take a look at a recent case between a dealer and the manufacturer he purchased goods from. This dealer had placed a phone order for certain goods which were immediately shipped to him by the mill. An invoice was mailed a week or so later and it was promptly paid.

The goods, however, turned out to be defective and, after unsuccessfully attempting to resolve this with the manufacturer for approximately one-and-a-half years, the dealer sued the mill for various damages, including, but not limited to, the price paid.

The manufacturer defended this action upon its claim that the contract of sale for the purchase in question specifically stated that any lawsuits were barred if they were not commenced within one year of the delivery. Although the normal statute of limitations is four years, as provided by the UCC, the seller has claimed that since he put language in his invoice modifying that to one year, that language was binding upon the buyer.

Unjust Ruling

The judge agreed with the seller and dismissed the buyer’s lawsuit because it had not been brought within the agreed to one-year period. The buyer felt this decision was unjust and appealed it to the state’s second highest court. The five-judge panel there determined that the first judge was wrong and the case should not have been dismissed. They held that the terms of the invoice, including the one-year limitation on lawsuits, was “not binding upon the purchaser because the invoice was not sent within a reasonable time within the meaning of the UCC.”

It is, as this seller and buyer found out, not an easy task to determine, through the written documents, just what was agreed to in the typical purchase between merchants such as a retailer and a wholesaler. If it is important to you that something be included, or excluded, in such an agreement, you must put it in writing immediately and you must, in writing, immediately respond to anything received from the other party. If you do this you should be able to avoid having a judge dismiss your claim on a technical ground.