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the courts will not enforce those terms
which materially alter the agreement.
This of course begs the question of
what terms “materially” alter the of-
fer. The courts are not united in their
response. Courts generally find that
an arbitration clause materially alters
the agreement and will not impose it
upon the supplier. Likewise, clauses
in the purchase order indicating that
any lawsuits against the purchaser/
contractor will be in a particular state
other than the location of the supplier
are considered to materially alter the
contract. Similarly, courts have found
that warranty disclaimer language will
materially alter the agreement.
If the purchase order contains
terms that do not materially alter the
agreement then the items will be in-
corporated into the agreement. The
only other way to prevent those non-
material terms from being included is
to object to them within a “reasonable
time”. What is “reasonable” depends
upon how the court views any par-
ticular set of facts. The bottom line is
the sooner you make an objection the
better. This implies that you are actu-
ally looking at the terms that are on
the purchase order. Many people do
not, they simply look at the front of the
sheet and file the purchase order. It is
important that your personnel be pre-
pared to evaluate the terms and condi-
tions on a purchase order and notify
you if they are objectionable.
The courts try to cut through all
of the legalese and if they can find a
contract on terms where the parties did
not differ, then the courts will enforce
the contract upon the terms which are
agreed to. It is important to remem-
ber that conduct by both of the parties,
which shows the existence of a con-
tract, is sufficient to establish existence
of the contract. What the conduct rule
tells us is that if the actions of the par-
ties indicate an intention to contract
and there is an agreement on some or
most of the terms, the court will find
a contract, rather than reject the entire
transaction even if there is not a writ-
ten agreement.
As stated above, this is the first of
a three part series. The remaining ar-
ticles will discuss a seller’s rights and
remedies and also a discussion on war-
ranties.
The information contained in this article
is not intended as legal advice. This infor-
mation is subject to frequent changes and
thus you should seek legal counsel.
CONSTRUCTION LAW
