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Butler Machines v Ex-Cello Corp

[1979] 1 WLR 401

Case summary last updated at 03/01/2020 15:15 by the Oxbridge Notes in-house law team.

Judgement for the case Butler Machines v Ex-Cello Corp

 B offered to sell a machine to E, sending him a standard order form of B, B*, to sign. E ordered a machine on its own standard order form, E*, with a slip for the supplier to sign, acknowledging the terms of E*. B signed and returned the form E* with a cover letter explicitly stating that they were agreeing to supply a machine on their own original terms. CA held that the terms of E* applied since B had signed it and that the cover letter was really just a means of identifying the order. 

 Lord Denning: The conduct and correspondence has to be viewed altogether etc (see above) and on this view he says that the sellers had accepted E*’s terms. Denning contradicts his own, sensible approach: looking at all the correspondence, the letter accompanying the signed E* showed that there was NO agreement to the terms and instead he sticks to a v. formalistic reliance on the signature on E*, which the cover letter rendered meaningless.

He says that mirror image approach is outdated and a better way of testing if a contract exists “look at all the documents passing between the parties — and glean from them, or from the conduct of the parties, whether they have reached agreement on all material points”. NB in this case he says that this will lead us to view the last set of terms proposed, to which there is no objection, as the contract. Here, he fails to apply his own test since there was objection on material terms to E*, namely price variation, even though the letter did not say so explicitly. However, were this test to actually be applied, it would prevent voiding of contracts on “immaterial terms”. In terms of “content” he says “The terms and conditions of both parties are to be construed together. If they can be reconciled so as to give a harmonious result, all well and good. If differences are irreconcilable — so that they are mutually contradictory — then the conflicting terms may have to be scrapped and replaced by a reasonable implication”. This would crete a fair conclusion but would damage legal certainty. 
Lawton LJ: If B’s letter was a counter offer that would mean that E’s conduct implied acceptance of it, which is impossible given that E had made clear from correspondence that they would only deal on their terms. Wrong: the letter was a counter offer since it insisted on the original terms and therefore there was either no meeting of the minds and no contract OR E’s conduct must be taken to mean acceptance of B’s terms. The letter said that delivery would be “in accordance with our revised quotation of May 23”- i.e. their terms, not just the identification of the order. 

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