Suppliers Beware: UCC May Bar Terms Not Included In Subsequent Offer
3/15/2016 | Construction Blog
While it’s not a change in the law, a recent holding by the Pennsylvania Superior Court provides a friendly reminder to suppliers in the construction industry. When goods are being sold, the UCC applies; and, importantly, terms and conditions in prior offers not included in the accepted offer are not part of the agreement.
In Beemac Trucking v. CNG Conc., 2016 Pa.Super. 32 (Feb. 16, 2016), Beemac sought to purchase a number of pieces of equipment needed to build a natural gas fueling station. CNG was an agent for the seller of the equipment. An initial round of discussions took place by which an offer was made for the sale of the equipment. That initial offer included a number of terms and conditions. Among the terms included was forum selection clause requiring that disputes be resolved in Texas.
As is normally the case, negotiations proceeded and essential terms surrounding price and the equipment to be purchased were discussed. The facts suggest that the seller assumed the lesser terms that were no longer being discussed were agreed upon and needed no further mention. Whether it was purposeful or a simple oversight, those lesser terms were not included or even incorporated in writing into the final offer that was eventually accepted.
A dispute later arose when the equipment was not delivered as promised. The buyer brought suit for breach of contract. The seller then challenged the venue on the basis of the forum selection clause in one of the earlier written proposals that incorporated its standard terms and conditions. The Superior Court, on appeal, reversed the trial court and held that the forum selection clause was unenforceable. It based its decision on the fact that the last, accepted offer did not include any reference to the relied upon terms and conditions. Since the subsequent offer – the one that was accepted – made the prior offer void as a matter of law under the UCC, the forum selection clause could not be enforced since it was only part of the previously voided offer.
The UCC applies to the sale of goods. So this holding has particular application to suppliers in the construction industry. But any construction company selling a product (not labor and materials to build a project) should remember this rule and negotiate contracts accordingly.