Plaintiff/Counter-Defendant Option

1 For purposes of clarity, the Court will refer to Defendant/Counter-Plaintiff OpenPeak, Inc., only as
either Counter-Plaintiff or the Buyer. Likewise, the Court will refer to Plaintiff/Counter-Defendant Option
Wireless, Ltd, only as either Counter-Defendant or the Seller.
2 The Court accepts all of Counter-Plaintiff’s allegations as true in determining whether Counter-Plaintiff
has stated a claim for which relief could be granted. See Hishon v. King & Spalding, 467 U.S. 69, 73 (1984).
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 12-80165-CIV-MARRA
OPTION WIRELESS, LTD.,
an Irish limited liability company,
Plaintiff,
v.
OPENPEAK, INC.,
a Delaware corporation,
Defendant.
______________________________/
OPINION AND ORDER
THIS CAUSE is before the Court upon Plaintiff/Counter-Defendant’s Motion to Dismiss
Defendant/Counter-Plaintiff’s Counterclaim (DE 6).1 Counter-Plaintiff OpenPeak Inc. filed its
Memorandum in Opposition (DE 8). Counter-Defendant Option Wireless, Ltd, replied. (DE 12). The
Court has carefully considered the briefs of the parties and is otherwise fullyadvised in the premises.
I. Introduction2
In July 2010, Counter-Plaintiff OpenPeak Inc. was producing a computer tablet product for
AT&T. (DE 4 ¶ 5). Seeking embedded wireless data modules for the tablet, Counter-Plaintiff
submitted a purchase order to Counter-Defendant Option Wireless, Ltd, for 12,300 units of the
modules at the price of $848,700.00. (DE 4 ¶ 4). Section 9 of the purchase order, labeled “BUYER’S
TERMS AND CONDITIONS,” provided that
[a]ll purchase orders and sales are made only upon these terms and conditions and
those on the front of this document. This document, and not any quotation, invoice,
or other Seller document (which, if construed to be an offer is hereby rejected), will
Option Wireless, Ltd. v. OpenPeak, Inc. Doc. 19
Dockets.Justia.com
2
be deemed an offer or an appropriate counter-offer and is a rejection of any other
terms or conditions. Seller, byaccepting any orders or delivering anyproducts having
previously received these terms and conditions, will be deemed to have assented to
these terms and conditions, notwithstanding any terms contained in any prior or later
communication from Seller, and whether or not Buyer specifically or expressly
objects to any of Seller’s proposed terms. Buyer’s failure to object to any document,
communication or act of Seller will not be deemed a waiver of any of these terms and
conditions. Anyaddition or change to these terms and conditions must be specifically
agreed to in writing by a duly authorized officer of Buyer before becoming binding
on Buyer.
(DE 1-3 at 3 ¶ 9).
The parties agreed that the modules would be delivered in separate shipments. (DE 4 ¶ 6).
After Counter-Defendant (the Seller) delivered several shipments, the parties agreed that the Seller
would send the remaining units—9,840 modules totaling $678,960.00—in a final shipment to
Counter-Plaintiff (the Buyer), contingent on the Buyer putting down a 12.5% deposit payment for
the balance due. (DE 4 ¶¶ 6–8). The Seller’s invoice, which reflected these terms, also provided that
[t]he Buyer has 14 calendar days from the date of the invoice to contest by registered
letter addressed to the Seller any aspect of the invoice and the General Sales
Conditions referred to therein relating to the Goods received from the Seller. The
Buyer shall be deemed to have accepted the terms of any invoice (including the
General Sales Conditions referred to therein) if the Seller fails to receive a
notification from the Buyer within such time period.
. . .
In the event of a breach by the Seller of any warranty in relation to the Goods, the
Buyer’s sole remedy shall be to reject the Goods to which such breach of warranty
relates. Upon such a rejection of the Goods, the Seller shall refund to the Buyer that
part of the price which relates to such Goods to the extent that it has been paid by the
Buyer. Following such rejection and refund, the Buyer shall have no further rights
whatsoever in respect of the breach of warranty.
. . .
Without prejudice to [the above clause], and in each case to the fullest extent
permitted by applicable laws, (a) the Seller shall not be liable to the Buyer for any
indirect or consequential loss, damage, cost or expense of any kind which the Buyer
may suffer or incur, which arises out of, or is connected with, a breach by the Seller
of these General Sales Conditions or of any other obligation of the Seller (including
without limitation any loss of opportunity, loss of production, loss of corruption to
data, loss of profits or of contracts, loss of operation time and loss of goodwill or
anticipated savings), irrespective of whether the Buyer’s claim for recoveryin respect
3 The Buyer’s fourth count alleges unjust enrichment. The Seller has moved to dismiss the count because
it is inconsistent with the Buyer’s allegation that the parties entered into a contract. (DE 6 at 11). The Court need
not address the Seller’s argument, however, because “[i]t is premature, at this stage of litigation, to require [the
Buyer] to make an election of remedies.” Bonilla v. Crystal Graphics Equip., Inc., No. 11-21470-CIV, 2012 WL
360145, at *4 (S.D. Fla. Feb. 2, 2012) (citation omitted).
3
of that loss, damage, cost or expense is (or would but for this provision be) founded
in contract, tort (including negligence) or otherwise, and irrespective of whether or
not the Seller has been advised of the potential for the loss in question; and (b) in no
event shall the liability of the Seller to the Buyer in respect of or in relation to, or in
connection with the Goods, whether arising in contract, tort or otherwise, exceed the
amount (exclusive of VAT) actually paid by the Buyer to the Seller in respect of the
relevant Goods.
(DE 1-4 at 3 ¶¶ 6, 8.1, 8.2). The Buyer paid the deposit, $84,870.00, and the Seller delivered the
goods on January 14, 2011. (DE 4 ¶¶ 8–9).
Upon inspecting “a representative sample of the modules” in the final shipment, the Buyer
found several defects, and formally rejected the modules on January 24, 2011, because they failed
“to conform to material product specifications.” (DE 4 ¶¶ 10–11). The Buyer accordingly returned
the defective modules on April 12, 2011. (DE 4 ¶ 14). The Seller received the goods and
subsequently requested data from the Buyer to prove the modules were not defective. (DE 4 ¶ 15).
The Buyer complied. (DE 4 ¶ 15). The Buyer maintains that the Seller has not shown that “the
modules were not defective or otherwise conformed to material product specifications.” (DE 4 ¶ 15).
The Buyer brings four counts against the Seller, three of which are for breach of contract.
These three counts allege that the initial purchase order that the Buyer submitted to the Seller is the
controlling written contract between the parties, that the Seller breached the contract by delivering
defective modules, and that the Seller’s breach caused the Buyer harm in the form of, inter alia,
causing the Buyer to lose its tablet project with AT&T. The Buyer seeks damages including but not
limited to incidental and consequential damages as compensation.3
The Seller has moved to dismiss the Buyer’s breach of contract claims on the grounds that
the purchase order is not the controlling contract, the terms of the controlling contract “explicitly
4 The Court notes that the Seller has moved to dismiss only the Buyer’s prayer for consequential
damages. A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) applies to “claims,” not to
requests for a certain type of damages that are “merely the relief demanded as part of a claim.” Hutchings v. Fed.
Ins. Co., No. 6:08-CV-305-ORL-19KRS, 2008 WL 4186994, at *1 (M.D. Fla. Sept. 8, 2008); see also Paul
Gottlieb & Co., Inc. v. Alps S. Corp., 985 So. 2d 1, 8 (Fla. Dist. Ct. App. 2007) (noting that enforcing the liability
limitation clause at issue would only bar recovery of consequential damages, not direct and incidental damages).
The Seller’s appropriate remedy here would therefore be a motion to strike under Rule 12(f); and the Court may
treat the Seller’s improperly labeled motion to dismiss as a motion to strike if it chooses. See Hutchings, 2008
WL 4186994, at *2. The Court does not exercise this authority, however, and construes the Seller’s motion as
labeled.
4
preclude [the Seller’s] liability for consequential damages,” and, in any event, the Buyer has not
properly pleaded its alleged entitlement to consequential damages.4 For the reasons that follow, the
Seller’s Motion to Dismiss (DE 6) is denied.
II. Legal Standard
Rule 8(a) of the Federal Rules of Civil Procedure requires “a short and plain statement of the
claims” that “will give the defendant fair notice of what the plaintiff’s claim is and the ground upon
which it rests.” Fed. R. Civ. P. 8(a). The Supreme Court has held that “[w]hile a complaint attacked
by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff’s
obligation to provide the ‘grounds’ of his ‘entitlement to relief’ requires more than labels and
conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual
allegations must be enough to raise a right to relief above the speculative level.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007) (internal citations omitted).
“To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted
as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (quotations and citations omitted). “A claim has facial plausibility when the plaintiff pleads
factual content that allows the court to draw the reasonable inference that the defendant is liable for
the misconduct alleged.” Id. Thus, “only a complaint that states a plausible claim for relief survives
a motion to dismiss.” Id. at 679. When considering a motion to dismiss, the Court must accept all
of the plaintiff’s allegations as true in determining whether a plaintiff has stated a claim for which
5 Because Florida has codified Uniform Commercial Code § 2-207, see Fla. Stat. § 672.207 (2012),
which is the applicable substantive law in this case, the Court will refer directly to those provisions of the UCC.
See Paul Gottlieb & Co., 985 So. 2d at 5.
5
relief could be granted. Hishon v. King & Spalding, 467 U.S. 69, 73 (1984).
III. Discussion
“The elements of a breach of contract action are (1) valid contract; (2) a material breach; and
(3) damages.” Kaloe Shipping Co. Ltd v. Goltens Serv. Co., Inc., 315 F. App’x 877, 880 (11th Cir.
2009) (quoting Beck v. Lazard Freres & Co., 175 F.3d 913, 914 (11th Cir. 1999) (per curiam)). At
the heart of the Seller’s Motion to Dismiss is the argument that the “valid contract” between the
parties does not allow for consequential damages; thus, the Buyer’s breach of contract claims
requesting such damages cannot properlystate a claim for relief. To determine what contract controls
the dispute between these two parties—and by extension, whether that contract permits recovery of
the consequential damages that the Buyer seeks—the Court must engage in “the battle of the forms”
governed by Section 2-207 of the Uniform Commercial Code.5
A. Battle of the Forms
Section 2-207 provides that
(1) A definite and seasonable expression of acceptance or a written confirmation
which is sent within a reasonable time operates as an acceptance even though it states
terms additional to or different from those offered or agreed upon, unless acceptance
is expressly made conditional on assent to the additional or different terms.
(2) The additional terms are to be construed as proposals for addition to the contract.
Between merchants such terms become part of the contract unless:
(a) The offer expressly limits acceptance to the terms of the offer;
(b) They materially alter it; or
(c) Notification of objection to them has already been given or is given within
a reasonable time after notice of them is received.
(3) Conduct by both parties which recognizes the existence of a contract is sufficient
6
to establish a contract for sale although the writings of the parties do not otherwise
establish a contract. In such case the terms of the particular contract consist of those
terms on which the writings of the parties agree, together with any supplementary
terms incorporated under any other provisions of this code.
Section 2-207 accounts for today’s reality that the traditional common law “mirror image”
rule—which foreclosed contractual formation where terms of an offer and acceptance varied—is
“both unfair and unrealistic in the commercial context.” Steiner v. Mobil Oil Corp., 569 P.2d 751,
757 (Cal. 1977). While the terms of an offer and of an acceptance in today’s commercial
transactions will rarely “mirror” each other, § 2-207 nevertheless allows parties to form a contract
in situations where they reach an agreement and subsequently exchange forms “which purport to
memorialize the agreement, but which differ because each party has drafted his form to give him
advantage.” Id. (internal quotations omitted). This is the situation before the Court.
The parties here did not enter into a formal written contract. They engaged in the common
commercial practice of a buyer submitting an order, a seller filling the order, and both parties
exchanging forms with self-serving boilerplate language. “This is precisely the type of situation in
which Article Two of the UCC is utilized to fill the gaps.” Premix-Marbletite Mfg. Corp. v. SKW
Chems., Inc., 145 F. Supp. 2d 1348, 1354–55 (S.D. Fla. 2001). While both parties here admit that
their disagreement over controlling contract terms presents the classic § 2-207 “battle of the forms”
scenario, however, neither party employs the proper analysis to determine what those terms should
be.
Section 2-207 lays out three ways for parties to form a contract. See Coastal & Native Plant
Specialties, Inc. v Engineered Textile Prods., Inc., 139 F. Supp. 2d 1326, 1333–34 (N.D. Fla. 2001)
(citing Jom, Inc. v. Adell Plastics, Inc., 193 F.3d 47, 53–54 (1st Cir. 1999)). First, the parties can
exchange forms with divergent terms; if the offeree’s expression of acceptance or written
confirmation is not made “expressly conditional” on the offeror’s assent to the additional or different
terms, a contract is formed. U.C.C. § 2-207(1). The three-part test of § 2-207(2) would then come
7
into play to determine the precise terms of the contract. Second, if the offeree’s expression of
acceptance or written confirmation is made “expressly conditional” on the offeror’s assent to the
additional or different terms, then that acknowledgment is treated merely as a counteroffer. See Jom,
Inc., 193 F.3d at 53. A contract could only be formed in that situation upon the original offeror’s
expression of affirmative acceptance of the counteroffer. Finally, where the first two possible
avenues do not result in contract formation, a contract may nevertheless be formed via § 2-207(3)
where the conduct of the parties demonstrates a belief that a contractual agreement was formed. See
Premix-Marbletite Mfg. Corp., 145 F. Supp. 2d at 1355–56.
By the terms of § 2-207, a contract can only be formed under § 2-207(1) or § 2-207(3)—it
cannot be formed under both. If a contract is properly formed under § 2-207(1), § 2-207(2) is applied
merely to determine that contract’s terms. See PCS Nitrogen Fertilizer, L.P. v. Christy Refractories,
225 F.3d 974, 980 (8th Cir. 2000); Coastal & Native Plant Specialties, Inc., 139 F. Supp. 2d at
1334–35, 1337. Section 2-207(2) does not apply where a contract is formed by operation of § 2-
207(3). See Premix-Marbletite Mfg. Corp., 145 F. Supp. 2d at 1355 n.10. Courts have applied this
analysis in both possible scenarios—contract formation under § 2-207(1) that looks to § 2-207(2)
but not § 2-207(3), see, e.g., Paul Gottlieb & Co., Inc., 985 So. 2d 1; Steiner, 569 P.2d 751; and
contract formation under § 2-207(3) that does not look to either § 2-207(1) or § 2-207(2), see, e.g.,
Belden Inc. v. Am. Elec. Components, Inc., 885 N.E.2d 751 (Ind. Ct. App. 2008); PCS Nitrogen
Fertilizer, L.P., 225 F.3d 974; White Consol. Indus., Inc. v McGill Mfg. Co., Inc., 165 F.3d 1185 (8th
Cir. 1999); Coastal & Native Plant Specialties, Inc., 139 F. Supp. 2d 1326. Thus, before this Court
can decide what terms govern the contractual relationship between the Buyer and the Seller, the
Court must determine how the parties formed their contract.
B. Formation Under § 2-207(1)
First, the Court looks to § 2-207(1) to determine whether the writings of the parties—here
the Buyer’s purchase order and the Seller’s invoice—established a contract. The Buyer’s purchase
6 The Court notes that the parties did not brief the issue of whether the Seller’s invoice constituted an
“expressly conditional” acceptance.
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order served as the offer in this transaction, expressing the Buyer’s desire to purchase a specific
number of modules at a specific price. But the application of § 2-207(1) here turns on whether the
Seller’s invoice constituted an acceptance such that a contract was formed.
The first clause of § 2-207(1) suggests that the invoice did constitute an acceptance of the
Buyer’s offer because it was “a written confirmation . . . sent within a reasonable time . . . even
though it state[d] terms additional to or different from those offered or agreed upon.” Fulfilling the
first clause, however, does not end the inquiry. After the comma, Section 2-207(1) provides a
restriction on contract formation where “acceptance is expressly made conditional on assent to the
additional or different terms.” The only provision of the Seller’s invoice that could be interpreted
as making acceptance “expressly conditional on assent to the different terms” reads,
The Buyer has 14 calendar days from the date of the invoice to contest by registered
letter addressed to the Seller any aspect of the invoice and the General Sales
Conditions referred to therein relating to the Goods received from the Seller. The
Buyer shall be deemed to have accepted the terms of any invoice (including the
General Sales Conditions referred to therein) if the Seller fails to receive a
notification from the Buyer within such time period.
(DE 1-4 at 3 ¶ 6). To determine whether this provision of the Seller’s invoice prevents the formation
of a contract under § 2-207(1), the Court looks to other courts that have analyzed the issue.6
Provisions that have been interpreted to expressly condition acceptance on assent to
additional or different terms, thus preventing contractual formation under § 2-207(1), include one
that stated, “Seller’s acceptance of Buyer’s order and shipments made pursuant thereto are subject
to and expressly conditioned upon Buyer’s acceptance of the terms and conditions herein . . . .” See
Coastal & Native Plant Specialties, Inc., 139 F. Supp. 2d at 1328. Another similar provision read,
“Seller’s acceptance of anyoffer byPurchaser to purchase the Products is expresslyconditional upon
the Purchaser’s assent to all the terms and conditions herein, including any terms additional to or
9
different from those contained in the offer to purchase.” See PCS Nitrogen Fertilizer, L.P., 225 F.3d
at 976. Yet another stated, “Where this agreement is found to be an acknowledgment, if such
acknowledgment constitutes an acceptance of an offer such acceptance is expresslymade conditional
upon Buyer’s assent solely to the terms of such acknowledgment, and acceptance of any part of
Product(s) delivered by Company shall be deemed to constitute such assent by Buyer.” See Belden
Inc., 885 N.E.2d at 755. And finally, a provision within a purchase order provided that it was “an
acceptance of such offer subject to the express condition that the Seller assent that this Purchase
Order constitutes the entire agreement between Buyer and Seller with respect to the subject matter
hereof and the subject matter of such offer.” See White Consol. Indus., Inc., 165 F.3d at 1191.
Conversely, a provision that has been interpreted to not expressly condition acceptance on
assent to additional or different terms, thus not preventing contractual formation under § 2-207(1),
reads, “Execution of this agreement constitutes an acceptance expressly limited to the terms herein
and any additional or different terms suggested by Seller are hereby rejected unless expressly agreed
to in writing by Buyer.” See Westinghouse Elec. Corp., 647 F. Supp. at 898. The court in
Westinghouse reasoned that the purchase order containing this provision operated as an acceptance
“because acceptance here was not expressly made conditional on assent to the different terms. [The]
language of an ‘acceptance expressly limited to the terms herein’ does not invalidate the acceptance
itself. Rather, that language merely qualifies the acceptance and limits its scope to those ‘terms
herein.’” Id. at 900 (emphasis in original) (citations omitted). This result, the court concluded, was
consistent with the policy behind § 2-207: that large-scale business transactions are facilitated by
recognizing contracts even though certain terms conflict.
A perusal of the law directs this Court to interpret narrowly the “expressly made conditional”
language of § 2-207(1)’s second clause. See Jom, Inc., 193 F.3d at 53 (a “seller’s invoice is not
deemed ‘expressly conditional’ under § 2-207 merely because its terms do not match the terms of
the buyer’s offer. Rather, to be deemed ‘expressly conditional,’ the seller’s invoice must place the
7 At least two courts have chosen to interpret § 2-207(1) more broadly. See Dorton, 453 F.2d at 1168
n.5. The majority of courts, however, have explicitly rejected this broader interpretation. See Steiner, 569 P.2d
at 762–63 (citing Ebasco Servs. Inc. v. Penn. Power & Light Co., 402 F. Supp. 421, 437–38 (E.D. Pa. 1975)).
10
buyer on unambiguous notice that the invoice is a mere counteroffer.”) (emphasis in original).
Provisions that have prevented contract formation under § 2-207(1) have either tracked the language
of the statute or expressed the intent to condition acceptance in no uncertain terms. As one court has
stated,
In order to fall within [the Subsection 2-207(1) proviso,] it is not enough that an
acceptance is expressly conditional on additional or different terms; rather an
acceptance must be expressly conditional on the offeror’s assent to those terms.
Viewing the Subsection (1) proviso within the context of the rest of that Subsection
and within the policies of Section 2-207 itself, we believe that it was intended to
apply only to an acceptance which clearly reveals that the offeree is unwilling to
proceed with the transaction unless he is assured of the offeror’s assent to the
additional or different terms therein. That the acceptance is predicated on the
offeror’s assent must be directlyand distinctlystated or expressed rather than implied
or left to inference.
Dorton v. Collins & Aikman Corp., 453 F.2d 1161, 1168 (6th Cir. 1972) (citations and quotations
omitted). Consequently, the Seller’s invoice does not prevent the formation of a contract in this
instance because the invoice does not by any terms “expressly condition” acceptance on “assent to
the additional or different terms.” Rather, the invoice merely requests that the Buyer contest any
unwelcome terms within a specified time period (14 calendar days); otherwise, “The Buyer shall be
deemed to have accepted the terms of any invoice . . . .” The Court does not interpret this request as
expressly conditioning acceptance on assent to the additional or different terms because finding
otherwise would require ignoring § 2-207(1)’s specific language and inferring the Seller’s intent.7
Moreover, in other cases dealing with provisions that set deadlines for objections to terms, courts
have only found the provisions to “expressly condition” acceptance on assent to additional or
different terms where the provision included “expressly conditional” language in addition to the
deadline for objections. See, e.g., PCS Nitrogen Fertilizer, L.P., 225 F.3d at 976; Coastal & Native
8 The Seller also admits that the terms of the Buyer’s purchase order “expressly limit acceptance to the
terms of the offer . . . .” (DE 6 at 9). As explained above, the Court does not address this issue because both
parties admit that the additional terms in the Seller’s invoice materially alter the terms in the Buyer’s purchase
order.
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Plant Specialties, Inc., 139 F. Supp. 2d at 1328. The Seller here included the deadline for objections,
not the language that would have unequivocally expressed an intent to condition acceptance on the
Buyer’s assent to the conflicting terms. Thus, with the parties having formed a contract under § 2-
207(1), the Court turns to § 2-207(2) to interpret that contract’s terms.
C. Terms Under § 2-207(2)
The parties do not dispute that they are both merchants within the context of the statute. (DE
6 at 6). Subsection (2) states that “[b]etween merchants” any additional terms set forth in the
acceptance become part of the contract unless (a) the offer expressly limits acceptance to the terms
of the offer; (b) the terms materially alter the contract; or (c) notification of objection to the terms
has already been given or is given within a reasonable time after notice of them is received. Here,
the terms and conditions of the Seller’s invoice bar the Buyer from recovering consequential
damages. The Buyer’s purchase order is silent on the issue. Both parties argue at length over whether
the Buyer’s purchase order “prospectively” objected to any conflicting provisions the Seller might
introduce, see § 2-207(2)(a), or whether the Buyer’s purchase order provided “notification of
objection” to the Seller’s additional terms, see § 2-207(2)(c). The Court need not address these
arguments, however, because both parties admit that the terms of the Seller’s invoice “materially
alter” those of the Buyer’s purchase order.8 (DE 6 at 9; DE 8 at 7–8). Because subsection (2) is
phrased in the disjunctive, additional terms do not become part of the contract if any of subsection
(2)’s exceptions apply. See Westinghouse Elec. Corp. v Nielsons, Inc., 647 F. Supp. 896, 900 (D.
Colo. 1986) (citing Steiner, 569 P.2d at 759).
In admitting that the terms of the Seller’s invoice materiallyalter the Buyer’s terms, the Seller
relies on Dependable Component Supply, Inc. v. Pace Electronics Inc, 772 So. 2d 582 (Fla. Dist. Ct.
12
App. 2000), for the proposition that in situations where the terms of an acceptance materially alter
those of the offer, “Courts look to the parties’ respective course of conduct.” (DE 6 at 9). The Court
finds the Seller’s reliance on Dependable misplaced.
Dependable dealt with a pair of merchants that had conducted business using conflicting
boilerplate language on various occasions. When the buyer rejected one of the seller’s deliveries as
nonconforming and unacceptable, the court was faced with incompatible venue provisions in the
parties’ writings. The court turned to § 2-207 to resolve the conflict. In finding that the seller’s
writing operated as an acceptance under § 2-207(1), the court noted that although the writing
expressed that it was “conditional on buyer’s assent to its additional terms”—which would normally
preclude contractual formation under § 2-207(1)—subsection (1)’s limitation did not apply because
the seller did not wait for the buyer’s assent before tendering performance. The court accordingly
found that a contract had been formed by the parties under § 2-207(1). To determine the terms of that
contract, § 2-207(2) should have been the next step. After stating that subsection (2) “seems to
supply an answer” to the conflict, however, the court turned to subsection (3), concluding that the
buyer’s conduct manifested an intent to object to an additional term in the seller’s invoice. The
Dependable court cites no authority justifying its reliance on subsection (3) and an analysis of the
parties’ conduct. In fact, the entirety of the Dependable opinion cites only one decision, Eastern
Cement v. Halliburton Co., 600 So. 2d 469 (Fla. Dist. Ct. App. 1992), a case in which the court
found a contract to be formed under subsection (1). The Eastern Cement opinion neither references
subsection (3) nor looks to the conduct of the parties to determine the relevant contract’s terms.
Because the Court does not find Dependable persuasive on the Seller’s proposition, the Court
does not “look to the parties’ respective course of conduct” and instead determines the terms of the
parties’ contract by turning to the “knock-out” rule borne from Comment 6 to § 2-207:
Where clauses on confirming forms sent by both parties conflict each party must be
assumed to object to a clause of the other conflicting with one on the confirmation
sent by himself. As a result the requirement that there be notice of objection which
9 Florida Statutes §§ 672.714–672.715 provide, in pertinent part,
Section 672.714: Buyer’s Damages for Breach in Regard to Accepted Goods
(1) Where the buyer has accepted goods and given notification he or she may recover as
damages for any nonconformity of tender the loss resulting in the ordinary course of events
from the seller’s breach as determined in any manner which is reasonable.
(2) The measure of damages for breach of warranty is the difference at the time and place of
acceptance between the value of goods accepted and the value they would have had if they had
been as warranted, unless special circumstances show proximate damages of a different
amount.
(3) In a proper case any incidental damages and consequential damages under the next section
may also be recovered.
Section 672.715: Buyer’s Incidental and Consequential Damages
(2) Consequential Damages resulting from the seller’s breach include:
(a) Any loss resulting from general or particular requirements and needs of which the
seller at the time of contracting had reason to know and which could not reasonably
be prevented by cover or otherwise.
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is found in subsection (2) is satisfied and the conflicting terms do not become a part
of the contract. The contract then consists of the terms originally expressly agreed to,
terms on which the confirmations agree, and terms supplied by this Act, including
subsection (2).
Comment 6 suggests that conflicting terms in exchanged writings “must be assumed to constitute
mutual objections” to each other causing a “mutual knockout” of both parties’ terms. Daitom, Inc.
v. Pennwalt Corp., 741 F.2d 1569, 1578–79 (10th Cir. 1984). The UCC’s “gap-filler” provisions fill
in the blanks. Id.
Here, the parties do not dispute that the provision in the Seller’s invoice barring the recovery
of consequential damages conflicts with the Buyer’s purchase order. Because the conflict results in
a “mutual knockout” of the parties’ terms, the Court finds that the UCC’s “gap-filler” (Florida
Statutes §§ 672.714–672.715 (2011)), which permits the recovery of consequential damages, is read
into the parties’ contract.9 Consequently, the “valid contract” between the parties does not preclude
the Buyer from recovering such damages, and the Seller’s motion to dismiss cannot be granted on
14
that ground.
D. Formation Under § 2-207(3)
The Seller, relying on Premix-Marbletite Manufacturing Corp. v. SKW Chemicals, Inc., 145
F. Supp. 2d 1348 (S.D. Fla. 2001), states that § 2-207(3) “must be applied by the Court here to
determine the terms of the parties [sic] contract.” (DE 6 at 7). For the reasons set forth above, the
Court disagrees.
Section 2-207(3) allows for the formation of a contract where “[c]onduct by both parties
which recognizes the existence of a contract is sufficient to establish a contract for sale although the
writings of the parties do not otherwise establish a contract.” (emphasis added). Here, the writings
of the parties do establish a contract under § 2-207(1) because the Seller’s invoice does not expressly
condition acceptance on the Buyer’s assent to the conflicting terms. Premix provides no support for
the Seller’s position because Premix did not analyze whether the parties formed a contract under §
2-207(1). Rather, the court in Premix began its § 2-207 analysis by concluding that “[t]he parties did
not enter into a formal written contract for the sale of [goods]” and that “the agreement for the sale
of [goods] existed by virtue of the parties’ conduct, not by the virtue of the exchange of forms.”
Premix-Marbletite Mfg. Corp., 145 F. Supp. 2d at 1354–55. The court did not analyze whether the
seller’s invoice expressly conditioned acceptance on assent to different terms and instead proceeded
directly to a conclusion that the parties’ conduct established a contract under § 2-207(3). This Court
need not address whether the conduct of the parties here formed a contract because their writings
established a contract under § 2-207(1).
E. Seller’s Remaining Arguments
Arguing in the alternative, the Seller suggests that the Buyer’s breach of contract counts
should be dismissed because 1) the Buyer has failed to plead the existence of a specific warranty that
the Seller breached (DE 6 at 7–8); and 2) the Buyer has failed to properly plead a cause of action for
consequential damages because the Buyer “wholly failed to allege that its alleged loss resulted from
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general or particular requirements and needs of which [the Seller] at the time of contracting had
reason to know and which could not reasonably be prevented by cover or otherwise.” (DE 6 at
10–11). The Court rejects both arguments as premature at the pleading stage. See Hutchings v. Fed.
Ins. Co., No. 6:08-CV-305-ORL-19KRS, 2008 WL 4186994, at *2 (M.D. Fla. Sept. 8, 2008) (“the
propriety of consequential damages is a fact intensive inquiry which is inappropriate at the pleading
stage.”) (citations omitted). The Buyer’s allegations that the Seller’s modules are defective and that
the Buyer lost the AT&T project are sufficient to survive the Seller’s motion to dismiss.
IV. Conclusion
Accordingly, it is herebyORDERED AND ADJUDGED that Plaintiff/Counter-Defendant’s
Motion to Dismiss Defendant/Counter-Plaintiff’s Counterclaim (DE 6) is DENIED.
DONE AND ORDERED in Chambers at West Palm Beach, Palm Beach County, Florida,
this 5th day of December 2012.
_______________________________________
KENNETH A. MARRA
United States District Judge