Butler Machine Tool Co v Ex-cell-o Corp (England)
Court of Appeal
Citations:  1 WLR 401;  1 All ER 965; (1977) 121 SJ 406;  CLY 338.
The claimant offered to sell the defendant a machine tool for £75,535. They stated that it was a condition of any order that the claimant’s proposed contract terms would apply, and that these terms would prevail over any contrary terms the buyer included in their order. One of these terms allowed the claimant to vary the price of the tool depending on the prevailing market prices at the delivery date.
The defendant wrote back to the claimant, agreeing to buy the tool but only on their own terms, which did not include the price variation clause. The defendant’s order had a tear-off part which the seller could sign and return. The tear-off slip stated that the signor would accept the order ‘on the terms and conditions thereon’. The claimant signed and returned the tear-off slip, but included a separate cover letter re-stating that the contract would be on the claimant’s terms. The parties later disputed whose terms applied to the arrangement.
- Was there an offer and acceptance?
- If there was a contract, whose terms applied?
The Court of Appeal held that there was a completed contract on the defendant’s terms. The defendant had not accepted the claimant’s offer when they submitted their order. Rather, they made a counter-offer. The claimant accepted this counter-offer when they completed and returned the tear-off slip.
This Case is Authority For…
A response to an offer which does not mirror the terms in that offer is not an acceptance. It is a counter-offer, which has the effect of terminating the original offer.
Lord Denning disagreed with the strict offer and acceptance analysis used by the other judges to find a contract. He thought this created archaic ‘battle of the forms’ problems in cases such as this. Instead, Lord Denning argued that the better approach was to construe the parties’ communications as a whole to determine whether there was a contract. He reached the same conclusion as the other two judges using this method, however. Lord Denning’s comments have been disapproved of in subsequent cases, such as Tekdata Interconnections v Amphenol  EWCA Civ 1209 and Lord Edmund-Davies comments in Gibson v Manchester City Council  1 WLR 294.