DTE Energy Technologies, Inc. v. Briggs Electric, Inc.

Nature of the Case

DTE Energy Technologies (P) brought suit against Briggs Electric (D) for a breach of contract in the sale of electric generator systems. DTE seeks damages and declaratory relief from Briggs Electric seeking incidental or consequential damages and forcing DTE to mediate. This is a motion by Briggs Electric to dismiss for lack of personal jurisdiction and improper venue.

Facts

DTE, a Michigan corporation, began negotiations with Hospital for the sale of electric generator systems to be installed in California. Hospital and Briggs entered into a contract where Briggs would act as general contractor. Hospital then directed DTE to attempt to negotiate a subcontract with Briggs. Eventually Briggs sent a Purchase Order to DTE.

Briggs contends that the Purchase Order constituted an offer. Briggs argues that DTE accepted its Purchase Order by email which acknowledged the receipt of the Purchase Order and constituted accepted conduct. DTE submitted an Order Acknowledgment and contends that the Order Acknowledgment and the Standard Terms and Conditions of Sale attached to the Order Acknowledgment should be construed as an offer. It claims that Briggs did not object to the terms of this alleged offer accepted the alleged offer when it sent payment. As part of those terms the Agreement was to be construed in accordance with and governed by the laws of the State of Michigan and any action thereon may be brought only in a court of competent jurisdiction located in Michigan.

DTE delivered the electric generator and argues that Briggs has breached its obligation to pay owing excess of $880,000. Briggs made a demand for damages arising out of delays in completion of the Project and submitted a demand for mediation against Hospital, and the general contractor seeking a declaration of the contractual rights and duties. Briggs acknowledges that the Order Acknowledgment contains a forum-selection and choice of law clause but contends that it did not agree to the forum-selection clause.

Issue

Under UCC 2-207 in order to avoid accepting an offer by sending a written confirmation containing additional or different terms, must that acceptance be expressly conditioned on the offeror’s assent to those terms?

Holding and Rule of Law

Yes. Under UCC 2-207 in order to avoid accepting an offer by sending a written confirmation containing additional or different terms, that acceptance must be expressly conditioned on the offeror’s assent to those terms.

A federal court may only exercise personal jurisdiction in a diversity action if such jurisdiction is authorized by the law of the state in which the court sits and is otherwise consistent with the Due Process Clause of the Fourteenth Amendment. There are two forms of personal jurisdiction: ‘general’ jurisdiction, which depends on a showing that the defendant has continuous and systematic contracts with the forum state sufficient to justify the state’s exercise of judicial power with respect to any and all claims the plaintiff may have against the defendant, and ‘specific’ jurisdiction, which exposes the defendant to suit in the forum state only on claims that ‘arise out of or relate to’ a defendant’s contracts with the forum.

DTE claims Briggs consented to personal jurisdiction by way of a forum-selection clause. DTE claims Briggs consented to personal jurisdiction when it accepted the forum-selection clause in the Order Acknowledgment. Briggs contends that the Order Acknowledgment was not the offer and contends that the Purchase Order was the offer. Under 2-204(1) an offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances. Orders are considered as offers to purchase.

DTE argues that the Purchase Order is “indefinite, incomplete, and contradictory.” We disagree. The Purchase Order contained a quantity, price, and delivery terms. The purpose of Section 2-207 is to interpret a contract that has been made, not to determine that one exists. UCC 2-207 alters the common law “mirror image rule” by establishing a general rule that a written confirmation operates as an acceptance even though its terms are not identical to those contained in the offer. In order to avoid accepting an offer by sending a written confirmation containing additional or different terms, a party can state that “acceptance is expressly made conditional on assent to the additional or different terms.” It is not enough that acceptance is expressly conditional on additional or different terms; rather, an acceptance must be expressly conditioned on the offeror’s assent to those terms.

At common law an acceptance had to be a mirror image of the offer. This rigidity ignored the modern realities of commerce. Where preprinted forms are used to structure deals, they rarely mirror each other, yet the parties usually assume they have a binding contract and act accordingly. Section 2-207 rejects the common law mirror image rule and converts many common law counteroffers into acceptances under 2-207(1).

DTE contends it expressly rejected the offer in its Order Acknowledgment simply by the terms stated in its Acknowledgment. But as stated above, in order for a written confirmation of an offer to amount to a rejection and/or a counteroffer, the written confirmation must be “expressly made conditional on assent to the additional or different terms.” The provision DTE contends is an express rejection does not contemplate the buyer’s assent to the additional or different terms. Rather, it makes any additional or different terms binding with or without the buyer’s assent. The Order Acknowledgment was not expressly conditional on Briggs’s assent to the additional terms, “[t]he additional terms are to be construed as proposals for addition to the contract.” Briggs argues that the forum-selection clause is an additional term and that it “materially alters” the terms of the parties’ contract. Briggs is not bound by the forum-selection clause. The forum-selection clause was contained in the fine print attached to an Order Acknowledgment and is not enforceable because it materially altered the contract.

Disposition

Motion to dismiss granted.