Also known as: Butler Machine Tool Co v Ex-cell-o Corp (England)
Court: Court of Appeal (Civil Division)
Judgment Date: 25 April 1977
Where Reported: [1979] 1 W.L.R. 401; [1979] 1 All E.R. 965
Legal Issues in Butler Machine Tool v Ex-Cell-O Corporation
Butler Machine Tool v Ex-Cell-O Corporation considered the formation of contracts, specifically the battle of the forms in contract law.
It examines whether a contract was formed between Butler Machine Tool Co. Ltd. and Ex-Cell-O Corporation (England) Ltd. and, if so, on whose terms.
The dispute centres on the validity and incorporation of a price variation clause in the contract.
Material Facts in Butler Machine Tool v Ex-Cell-O Corporation
In the dispute between Butler Machine Tool Co. Ltd. and Ex-Cell-O Corporation, the core issue arose from a contractual offer and counter-offer involving a machine tool.
Butler Machine Tool Co. proposed selling the machine for £75,535, including a price variation clause in their terms.
In response, Ex-Cell-O Corporation placed an order without the price variation clause, effectively making a counter-offer.
Butler Machine Tool Co. acknowledged this order, leading to contention over the contract’s terms, specifically whether the price variation clause was part of the agreement, at the point of payment upon delivery.
This discrepancy between the offer and counter-offer forms the crux of the legal battle, questioning the enforceability of terms not mutually agreed upon from the outset.
Judgment in Butler Machine Tool v Ex-Cell-O Corporation
The Court of Appeal allowed the appeal by Ex-Cell-O Corporation, holding that the contract was formed on the buyer’s terms without the price variation clause.
This decision reversed the initial judgment in favour of Butler Machine Tool Co., which had claimed additional payment under the price variation clause.
The Reason for the Decision in Butler Machine Tool v Ex-Cell-O Corporation
The court’s reasoning in the Butler Machine Tool v Ex-Cell-O Corporation case was deeply rooted in the principles governing the formation of contracts, specifically within the context of the “battle of the forms” – see Tekdata Interconnections Ltd v Amphenol Ltd (2009).
The main aspect of this decision lay in the application of the “last shot” rule, a doctrine that determines the terms of a contract based on the final set of unobjected-to conditions exchanged between parties before the commencement of performance.
By accepting Ex-Cell-O’s purchase order without reasserting the price variation clause, Butler Machine Tool Co. effectively consented to the exclusion of this clause from the contract.
The court interpreted this sequence of actions and documents as an implicit agreement to Ex-Cell-O’s terms.
This interpretation underscored the importance of clear and explicit communication in contractual negotiations and the legal weight of the documentation exchanged between parties – see Hyde v Wrench (1840).
Legal Principles in Butler Machine Tool v Ex-Cell-O Corporation
Butler Machine Tool v Ex-Cell-O Corporation illustrates the importance of clarity in contractual negotiations and the principle that the acceptance of an offer or counter-offer must be unequivocal.
It underscores the “last shot” rule in the battle of forms, establishing that the terms of the contract are determined by the last set of terms that are sent and accepted before performance begins.
The decision in Butler Machine Tool v Ex-Cell-O Corporation illuminated the judiciary’s approach to resolving ambiguities in contract law, emphasising that the onus is on the parties to ensure their terms are unequivocally accepted and that silence or failure to contest can be construed as assent to the terms last presented.
