Contract Formation and Battle of the Forms Under Article 2 of the U.C.C

The IDC Monograph John J. O’Malley Seyfarth Shaw LLP, Chicago

Contract Formation and Battle of the Forms Under Article 2 of the U.C.C.

Contract formation is the bread and butter of commercial litigation. Indeed, it is routinely the focus of briefing in various stages of commercial litigation. The content of this Monograph provides the basics for your next brief on Illinois law regarding offer, acceptance, and consideration under the Uniform Commercial Code (U.C.C.). It will also review the Illinois cases regarding the “battle of the forms.”

U.C.C. Applies to Sales of Goods

Illinois adopted the U.C.C. in 1961.1 Article 2 of the U.C.C. applies only to transactions in goods.2 What are “goods” under the U.C.C.? A better question may be what is not. The definition of “goods” is broad. Under the U.C.C., “goods” are:

[A]ll things, including specially manufactured goods, which are movable at the time of identification to the contract for sale other than the money in which the price is to be paid, investments securities (Article 8) and things in action. “Goods” also includes the unborn young of animals and growing crops and other identified things attached to realty as described in the section on goods to be severed from realty (Section 2-107).3

Sometimes it is obvious that the transaction involves goods. Sometimes it is not. For instance, non-traditional items like mailing lists and demographic information have been considered goods.4 Many contracts, however, are mixed contracts that involve both goods and services. Thus, the first step is to determine if the U.C.C. or the common law applies to the contract. The “predominant purpose” test is used to decide if these “mixed” contracts fall within the scope of Article 2. 5 “Under this test, if the contract is predominantly for the sale of goods, with services being incidental thereto, the contract” is governed by Article 2.6 “Conversely, if the contract is predominantly for services, with the sale of goods being incidental thereto,” the contract is not within Article 2.7 Courts applying this test have found that distributorship agreements and even contracts for sales of businesses as going concerns are U.C.C. contracts.8 A transaction between a patient and pharmacy that dispensed an oral contraceptive prescription was predominantly for healthcare services and not governed by the U.C.C.9 In sum, at this initial stage, critically review the contract and be careful not to assume that merely because the contract includes services that the U.C.C. does not apply.

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Statements or expression of opinions in this publication are those of the authors and not necessarily those of the association. IDC Quarterly, Volume 25, Number 2. © 2015. Illinois Association of Defense Trial Counsel. All Rights Reserved. Reproduction in whole or in part without permission is prohibited.

Statute of Frauds

The U.C.C. contains its own statute of frauds. It provides:

. . . a contract for the sale of goods for the price of $500 or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by his authorized agent or broker. A writing is not insufficient because it omits or incorrectly states a term agreed upon but the contract is not enforceable under this paragraph beyond the quantity of goods shown in such writing.10

In short, the requirements for a contract for the sale of goods for $500 or more are: (1) a writing sufficient to indicate a contract for sale between the parties exists; (2) the writing is signed by the party against whom enforcement is sought or his authorized agent and; (3) the quantity of goods to be sold is stated.11 The U.C.C. does not require that all the terms of the contract be in writing, only that there is adequate documentary evidence of its existence and essential terms.12 The writing “must indicate that a contract for sale has been made.”13 Documents that merely evidence negotiations do not satisfy the statute of frauds. 14 As such, a written purchase order prepared but never sent by the party against whom enforcement is sought does not satisfy the statute of frauds without written documentation that there was an agreement between the parties.15 The U.C.C.’s writing requirement is relaxed in a few contexts. First, the writing requirement is relaxed when the contract is “between merchants.” “Between merchants” is defined in the U.C.C. to mean the parties “are chargeable with the knowledge or skill of merchants.”16 In such cases, it is enough “if within a reasonable time” of the making of the alleged contract “a writing in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents,” unless the party receiving it objects within 10 days.17 Further, there is an exception to the writing requirements for specially manufactured goods,18 if the party against whom enforcement is sought admits that a contract is made, 19 or when payment or the goods have been accepted.20 The last exception applies only to the goods delivered and differs from the partial performance exception to the general statute of frauds.21

Is there a Contract? Offer, Acceptance, and Consideration

It is important to remember that the U.C.C. distinguishes between an agreement and a contract. The U.C.C. defines “agreement” as “the bargain of the parties in fact, as found in their language or inferred from other circumstances.”22 A contract, on the other hand, is defined as the total legal obligation that results from the parties’ agreement. 23 An “agreement” is not necessarily a legally binding contract under the U.C.C., and a “contract” can be less or more than the agreement. 24 For example, a contract is more than the underlying agreement whenever the U.C.C. adds terms to the parties’ bargain such as the implied warranty of merchantability. The contract is less than the agreement when part of it is unenforceable due to the statute of frauds. No specific formalities, forms, or “magic words” are required to make a contract. “A contract for the sale of goods may be made in any manner sufficient to show agreement, including the parties’ conduct that recognizes the existence of such a contract.”25

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Importantly, determining if a contract exists is not affected by other statutory requirements. For example, the Illinois Consumer Fraud and Deceptive Business Practices Act requirement to give notice of the right to cancel is not a condition precedent to the existence of an enforceable contract.26 A contract exists if the three basic ingredients are present: offer, acceptance, and consideration.27 If any one of them is missing, a contract does not exist. Thus, when determining if a binding contract exists the court must consider if each of these basic elements is present.28

A. Offer “An offer is an act on the part of one person, whereby he gives to another the legal power of creating the obligation called the contract.”29 While this seems straightforward, in practice, it is not always so clear. Take for example, price quotations. Price quotations are generally not offers because they do not contain all the terms to form a contract. 30 Instead, they are considered “invitations to enter into negotiations or to submit offers.”31 A buyer’s purchase order submitted in response to a price quotation is an offer.32 A price quotation that is sufficiently detailed, however, can constitute an “offer creating the power of acceptance.”33 But, the offeror must intend that the contract exist upon acceptance of the offer. That is, “it must reasonably appear from the price quotation that assent to that quotation is all that is needed to ripen the offer into a contract.”34 “A price quotation that is subject to the seller’s confirmation is not an offer since the buyer’s assent will not consummate the contract.”35 A seller’s attempt to control the terms by requiring “home office approval” of any response can sometimes backfire. In McCarty v. Verson Allsteel Press Co., the seller of a punch press entered into negotiations with the buyer of the machine, eventually submitting a proposal to the buyer.36 The proposal provided that “[a]ll quotations, orders and contracts are subject to acceptance of home office.”37 The seller also included a “Conditions of Sale-Machinery” that provided limitations of liability, warranties, and indemnification of the seller.38 The buyer sent its form purchase order. When litigation arose, the seller argued that its proposal was the offer accepted by the buyer and that the limitations of liability, warranties, and indemnification in the seller’s documents were part of the contract. 39 The court disagreed. In discussing the formation of the contract between the seller and buyer, the court stated:

A price quotation, if sufficiently detailed as was the price quotation in the present case, may constitute an offer. (Citations omitted.) It does not follow, however, that a price quotation which is not binding when accepted by the buyer but only becomes binding if and when accepted by the seller, who is under absolutely no obligation to accept it, can by itself be treated as an offer.40

The limitation and indemnification provisions were not part of the contract, and the buyer’s purchase order was treated as the offer.

B. Acceptance Acceptance of a contract is a “manifestation of assent to the terms . . . made by the offeree in a manner invited or required by the offer.”41 According to section 2-206 of the U.C.C.:

(1) Unless otherwise unambiguously indicated by the language or circumstances

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(a) an offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances . . .42

Any reasonable manner of acceptance is available unless the offeror has made clear that it will not be acceptable. 43 Former technical rules of acceptance, such as a telegraphic offer must be accepted by telegraphed acceptance, are no longer required under the U.C.C.44 If an offer does not identify a specific mode of acceptance then “the acceptance does not need to be in any particular form or wording.”45 The offeror is not powerless. Even under the U.C.C., the offeror is still the “master of the offer.”46 If the offeror “unambiguously indicates” the means of acceptance then the offer can only be accepted by those means. “An offeror may prescribe as many conditions or terms of the method of acceptance as he wishes, including but not limited to, the time, place and manner of acceptance.”47 In Beard Implement Co., Inc. v. Krusa, the purchase order for the sale of a combine stated that it was “subject to acceptance by dealer,” followed by a blank line for the dealer’s signature.48 The defendant buyer signed the purchase order and wrote a check for the down payment, but the dealer never signed the purchase order. 49 The defendant buyer later decided not to purchase the combine and argued that there was no acceptance because the dealer had not signed the purchase order. The court agreed, stating:

[W]e conclude that the purchase order in this case ‘unambiguously’ required the signature by plaintiff’s ‘dealer’ in order to be a proper acceptance of defendant’s offer. Because plaintiff’s ‘dealer’ never signed the purchase order, no contract ever existed.50

Any definite and seasonable expression of acceptance may operate as an acceptance even though it is not a mirror image of the offer, unless the acceptance is expressly conditional on assent to the additional or different terms.51 Under the U.C.C., if the acceptance contains different terms from the offer, it does not make it ineffective or convert it into an offer.52 The parties have a contract despite the discrepancies. Even “radical” differences between the offer and acceptance are not grounds for concluding that there is no contract. 53 If there is an offer and an acceptance, then however contradictory (within reason) their terms are, there is a contract.54 “Although the modes of a valid acceptance may be varied, the requirement of an acceptance by the offeror still exists.”55 In Zinni v. Royal Lincoln-Mercury, Inc., the plaintiff brought a breach of contract action against the defendant for failing to deliver the bargained-for automobile.56 The purported agreement, however, was not signed by either party. After citing section 2-206, the court concluded:

The record before us contains no manifestations of the defendant’s acceptance of the plaintiff’s offer. Although the order form contains a space for the defendant’s signature, defendant did not sign it. While we believe defendant’s acceptance may be manifested in ways other than its signature, plaintiff’s complaint completely fails to allege an alternative manifestation of defendant’s acceptance. Absent an acceptance by the defendant, no contract existed between the parties.57

Similarly, in Echo, Inc. v. Whitson Co., Inc., a distributor sued a power equipment manufacturer for alleged breach of an equipment order.58 In response to the distributor’s purchase order, the manufacturer’s supervisor of customer service

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sent a letter “recapping your [purchase order].”59 The letter also stated that it would be helpful “when reconciling your order” and that it is “extremely important to verify that the information [in the letter] matches your records” because “mistakes and omissions can sometimes occur” when entering the order into the computer.60 The court concluded the letter was not an acceptance of the purchase order for the following reasons:

[W]e cannot say that the letter sent by [the manufacturer] was an objective manifestation of acceptance that could create a contract. The language of the letter does not use the vocabulary of acceptance. The letter, for example, describes attached computer reports as “recapping” - not accepting the [purchase order]. The letter mentions the need for “reconciling” and “verify[ing]” the [distributor’s] order to ensure that no mistakes were made when entering the order in [the manufacturer’s] computer. The letter thus reveals a clarification purpose rather than any commitment to provide the goods [the distributor] requested.61

Section 2-606 of the U.C.C. defines acceptance in the context of the receipt of goods and provides, in part:

1) Acceptance of goods occurs when the buyer

(a) after a reasonable opportunity to inspect the goods signifies to the seller that the goods are conforming or that he will take or retain them in spite of their non-conformity; or

(b) fails to make an effective rejection (subsection (1) of Section 2-602), but such acceptance does not occur until the buyer has had a reasonable opportunity to inspect them; or

(c) does any act inconsistent with the seller’s ownership; but if such act is wrongful as against the seller it is an acceptance only if ratified by him.62

Accepting and paying for the goods is always the circumstance that signifies the goods are conforming under section 2-606(1)(a).63 Of course, using or reselling the goods is inconsistent with the seller’s ownership under section 2- 606(1)(c).64 Softa Group, Inc. v. Scarsdale Development presents the typical application of section 2-606.65 In Softa, the plaintiff sold and delivered computer hardware and software to the defendant.66 The defendant admitted the purchase and receipt of the equipment but claimed it was “defective almost from its inception.”67 The defendant, however, had retained and used the goods for nearly 19 months.68 The court found that “would clearly fall within the confines of section 2-606(1)(c) of the Code as ‘an act inconsistent with the seller’s ownership.’” 69 In Sherwin-Williams Co. v. Mark Charcoal Co., Inc., the plaintiff sold and delivered to the defendant metal cans to be used for lighter fluid.70 The defendant claimed many of the cans leaked. After citing section 2-606(1), the court stated:

[The defendant’s] conduct in keeping the cans, filling them with fluid, and selling them to its customers created an effective acceptance under all three of these statutory tests. First, it kept nearly all the cans delivered. . . . Second, [the defendant’s] conduct in selling the goods to his customers obviates the possibility of an effective rejection. . . . Finally, [the defendant] has unquestionably ‘accepted’ the goods under § 2-606(1)(c). Illinois

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courts have consistently held that resale of goods purchased pursuant to a contract constitutes ‘an act inconsistent with the seller’s ownership’ under § 2-606(1)(c).71

C. Definite and Certain Terms Under the common law, when material terms and conditions are not ascertainable, there is no enforceable contract, even if parties intended to create a contract.72 The U.C.C., however, is more flexible. Under the U.C.C., even if one or more terms are left open, a contract does not fail for indefiniteness if there is a reasonably certain basis for giving an appropriate remedy.73 Even price is not an essential term if there is evidence from which the court can determine that the parties did intend to conclude the contract.74 “A contract may be enforced, even though some terms may be missing or left to be agreed upon,” unless the “essential terms are so uncertain that there is no basis for deciding whether the agreement has been kept or broken.”75 The U.C.C. completely changed the common law requirement for definite and certain terms. Section 2-204 provides:

Formation in General. (1) A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract. (2) An agreement sufficient to constitute a contract for sale may be found even though the moment of its making is undetermined. (3) Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy.76

You can have a contract under the U.C.C. when there likely would not have been a contract under the common law. In Luria Brothers & Co., Inc. v. Pielet Brothers Scrap Iron & Metal, Inc., the parties’ telephone discussions regarding price and quantity eventually led to an exchange of a “sales confirmation” and a “purchase confirmation.”77 Neither party signed the other’s form, both of which contained conflicting information regarding the delivery date and mode of shipment.78 When the defendant failed to deliver the promised scrap metal, the plaintiff sued.79 On appeal, the plaintiff argued that there was an oral contract based on the telephone discussions.80 The court agreed, stating:

While it is true that no oral contract exists if the parties intend not to be bound until a formal document has been executed, an oral agreement is enforceable if writings are intended only to memorialize a bargain already made. (Citation omitted.) [Defendant] has failed to introduce any direct evidence that the former characterization is applicable to the transaction involved here.81

A price quotation specifying: (1) the items to be sold; (2) the quantity and price of each item; and (3) the delivery terms contained the essential terms of a contract, and will not fail for indefiniteness.82 A letter containing language contemplating a past and future contractual relationship, signed by one of the parties and containing a specific quantity term and total output was sufficient to establish a contract.83 Beyond the quantity of goods exchanged, unspecified terms of the contract do not make the contract fail for indefiniteness and may be supplied under other provisions of Article 2.84

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D. Consideration A contract cannot exist without consideration.85 “Consideration is the bargained-for exchange of promises or performances, and may consist of a promise, an act or forbearance.”86 Anything that is a benefit to one of the contracting parties or disadvantage to the other is sufficient consideration to support the contract.87 Consideration for a contract may be furnished by a third party.88 But, consideration must be furnished, or the document is “merely an offer which may be withdrawn at any time before tender of compliance.”89 Although consideration is required, the adequacy of the consideration is another matter. Courts generally do not “inquire into the adequacy of consideration for a contract.”90 Inadequate consideration, “in the absence of fraud or unconscionable advantage . . . is insufficient to justify setting aside a contract.”91 Indeed, it is not the function of the court to decide if the parties made a bad bargain, “unless the amount is so grossly inadequate as to shock the conscience of the court.”92 Generally, there are two circumstances that will “shock the conscience of the court.” First, when the amount of consideration is grossly inadequate.93 Second, when the amount of consideration is not inadequate but the circumstances surrounding the contract are unfair.94 There are also additional limits on consideration. First, an illusory promise “is not sufficient consideration to support a contract.”95 “An illusory promise appears to be a promise, but on closer examination reveals that the promisor has not promised to do anything.”96 For example, in Gonzales v. West Suburban Imports, Inc., the plaintiff sued the defendant regarding the purchase of an automobile. 97 The defendant moved to dismiss or stay the action pursuant to a mutual arbitration provision in the purchase agreement.98 The arbitration provision excluded nearly every claim that the defendant could bring against the plaintiff.99 The court stated:

The express language of the Agreement makes clear that it is intended to require Plaintiffs to arbitrate any claims that they could assert against Defendant, but it imposes no such reciprocal obligation upon Defendant. Illusory promises of this sort are plainly unenforceable because a party has not obligated itself to do anything.100

The court found that the agreement lacked consideration and was unenforceable.101 Second, “the preexisting duty rule provides that where a party does what it is already legally obligated to do, there is no consideration because there has been no detriment.”102 For example, in White v. Village of Homewood, the plaintiff was injured during a fire department agility test.103 The defendant moved to dismiss the action based on an exculpatory agreement the plaintiff signed prior to the test, and the plaintiff argued that there was no consideration for the exculpatory agreement.104 The defendant replied that it was “in consideration of” the agreement, that it allowed the plaintiff to participate.105 The court rejected that argument, stating:

Analysis reveals, however, that defendants gave no consideration for the exculpatory agreement. According to the Illinois Municipal Code, defendants were required by law to administer the physical agility test, and plaintiff had a legal right to participate. (Citation omitted.) Consideration cannot flow from an act performed pursuant to a pre-existing legal duty. As a result, the exculpatory agreement is unenforceable as a matter of law.106

Consideration can take many forms. The critical issue is to identify the benefits and detriments to each party. For example, a mutual promise to arbitrate is sufficient consideration to support an arbitration agreement.107 Even subsequent performance can supply the necessary consideration if it is bargained for at the time the parties enter into the agreement.108

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“A promise to forego pursuit of a legal claim is adequate consideration to support formation of a contract if it is asserted in good faith.”109 Accordingly, “a promise to relinquish a right to appeal” a judgment provides consideration sufficient to support a contract.110 Compromising a disputed claim can be consideration for a contract.111

Must a Contract be Signed?

Ordinarily, “one of the acts forming part of the execution of a written contract is its signing.”112 Indeed, contracts for the sale of goods for more than $500 must be signed by the party against whom enforcement is sought.113 The “signing” requirement is loose under the U.C.C. Under the U.C.C., “a document may be signed by any mark or symbol placed on it with the present intention to authenticate the document.”114 A handwritten signature is not required.115

Who Decides Issues Related to Contract Formation? The Question of Law and Fact

“[W]hether a contract existed, the parties’ intent in forming it, and its terms are all questions of fact to be determined by the trier of fact.”116 Whether the contract was predominately for goods or services, and thus whether the U.C.C. applies, is generally a question of fact.117 Whether an additional term was a material alteration to a contract is a question of fact.118 However, where “there are no questions as to the facts essential to a purported contract, the existence of the contract is a question of law.”119 In general, the construction or interpretation of a contract is a matter to be determined by the court as a question of law.120 The determination of whether consideration is sufficient to support a contract is a question of law.121

Defenses to Contract

A. Mutual Mistake A contract may be rescinded where there is a mutual mistake of a material fact that relates to an essential element of the contract, such that there is no “meeting of the minds” and no agreement.122 The mistake must have existed at the time the contract was executed, “must have been mutual and common to all parties, and must have been such that the parties intended to say one thing” but expressed another in the written contract.123 In these cases, the parties understand that the real agreement is what one party alleges it to be, but the actual contract does not reflect that agreement.124 To invalidate a contract on these grounds, the mistake must relate to a past or present fact material to the contract, not a future fact.125 “[M]istaken predictions will not invalidate a contract.”126 A contract condition is material for purposes of determining whether rescission is necessary if it is essential to one of the parties and is mutually agreed upon and understood by the parties.127

B. Unilateral Mistake Illinois recognizes a right to rescind a contract based upon unilateral mistake of fact.128 The three requirements for rescission based upon unilateral mistake are: (1) the mistake relates to a material feature of the contract; (2) the mistake

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occurred despite the exercise of reasonable care; and (3) the other party must be placed in the position it was in prior to the contract being made.129 For example, in Cummings v. Dusenbury, the purchasers of a log house sued the defendants for rescission of the contract.130 After the trial court granted rescission, the defendants appealed.131 The appellate court first rejected the defendant’s argument that only mutual mistake can justify rescission.132 The court then found that the plaintiffs had established that the mistake related to a material feature of the contract, that is, whether the log house was a “year round house.”133 Next, the court found that the plaintiffs had exercised reasonable care in ascertaining the suitability of the home for winter living by asking that question of the sellers who had lived in the house for a year.134 Finally, the court found that the plaintiffs could put the defendants back in the position they were in prior to the sale by paying rent for the time they occupied the house.135 The court affirmed the award of rescission.

C. Mistake of Law A mistake of law is not grounds for the avoidance of a contract actually signed and fairly entered into.136 For example, in Village of Oak Park v. Schwerdtner, the defendant’s mistake as to the tax consequences of the contract the defendant signed with his employer was not sufficient to void the contract.137 Similarly, in Jursich v. Arlington Heights Federal Savings and Loan Association, the plaintiff’s mistake as to the due date upon which late payment fees could be assessed under a mortgage and note was insufficient to void the mortgage contract and note.138

Special Issues

A. Battle of the Forms “Battle of the forms” refers to the situation where one business makes an offer using its preprinted form and the offeree responds with its own preprinted form.139 Recall the common law “mirror image rule,” that a contract does not exist if the acceptance is not identical to the offer.140 Instead, an acceptance with any additional terms was a fresh offer and had to be expressly accepted by the offeror for the parties to have a contract.141 The U.C.C. rejects the “mirror image rule.” 142 Under the U.C.C. section 2-207(1), an acceptance that adds terms to the offer will constitute a contract:

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.143

The purpose of section 2-207 is to allow parties to enforce their agreement despite discrepancies between an oral agreement and a written agreement.144 Although the U.C.C. has changed the mirror-image rule, “it still requires a definite expression of acceptance and does not change the basic common-law requirement that there must be an objective manifestation of mutual assent.”145 In Hessler v. Crystal Lake Chrysler-Plymouth, Inc., the plaintiff ordered a new promotional car.146 During the process of completing the order, one of the defendant’s employees wrote “ASAP” on the order as the date when the car was to be delivered.147 The defendant later sold the promotional car to a customer who had ordered it after the plaintiff.148 In the subsequent litigation, the defendant argued that the term “ASAP” was not part of the contract

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because it was written in the agreement by a salesperson after the plaintiff and the defendant negotiated the contract and after the plaintiff signed it.149 Relying on section 2-207(1), the court stated:

Although the term was not discussed by the parties, we conclude that, because the term was written contemporaneously with the execution of the contract by defendant’s authorized agent, and because neither party ever protested its inclusion in the Agreement, the term constituted part of the contract.150

One way buyers try to control the battle of the forms is to include language that the acceptance is conditional on the seller’s assent to the buyer’s terms. When this occurs, and the seller does not expressly assent to the terms, the exchange of forms does not create a formal contract.151 The buyer’s purported acceptance, which requires the seller’s specific assent to its differing terms, is a counteroffer and not a “true” acceptance.152 Courts have narrowly construed the exception for acceptance being “expressly made conditional on assent to the additional or different terms.” 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. The court in Chemtoy Corp., concluded that the following provision did not meet that strict standard:

This Purchase Order and Contract resulting from its acceptance shall be and remain subject to and conditioned upon each and all of the conditions of purchase printed on the face and on the reverse side of this purchase order. No agreement or other understanding in any way modifying the conditions of the Contract resulting from the acceptance of this purchase order will be binding upon the Buyer unless made in writing and signed by Buyer’s representative.153

On the other hand, in Hays v. General Electric, Co., the following language did meet this strict standard:

This order expressly limits acceptance to the terms stated herein and any additional or different terms proposed by the seller are rejected unless expressly assented to in writing.154

If it is a contract “between merchants,” the additional terms become part of the contract unless the offer expressly limits acceptance to the terms of the offer, they materially alter it, or notification of objection to them has already been given or is given within a reasonable time after notice of them has been received.155 If an acceptance merely adds a term, that terms binds the offeror. If the additional term contradicts a term in the offer, it does not become part of the contract. One court has summarized the application of section 2-207 as follows:

. . . a term inserted by the offeree is ineffectual (1) if the offer expressly limits acceptance to the terms of the offer, or (2) if the new term (a) makes a material alteration, in the sense that consent to it cannot be presumed, and (b) there is no showing that the offeror in fact consented to the alteration - whether (i) expressly, or (ii) by silence against the background of a course of dealings.156

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But, is there a contract, and if so, what are its terms? The U.C.C. does not say, but the majority rule and the rule in Illinois, is that the inconsistent terms cancel each other out and the court fills in the resulting void with a term of its own devising.157

In Northrop Corp. v. Litronic Industries, the plaintiff wanted to purchase printed wire boards.158 The plaintiff sent a request for bid to the defendant, stating that any purchase would be by a purchase order that would set forth the terms and conditions that would override any inconsistent terms in the offer.159 The defendant responded with an offer to sell the plaintiff the boards that included a 90-day warranty in lieu of any other warranties and provided that the offer’s terms would take precedence over any terms proposed by the plaintiff.160 The plaintiff responded with a purchase order that provided for a warranty that contained no time limit.161 The boards were shipped to the plaintiff and paid for.162 A dispute later developed over the quality of the boards and the length of the warranty.163 The court concluded there was a contract.164 What were the terms of the warranty? The court stated:

The Uniform Commercial Code . . . does not say what the terms of the contract are if the offer and acceptance contain different terms, as distinct from cases in which the acceptance merely contains additional terms to those in the offer. The majority view is that the discrepant terms fall out and are replaced by a suitable U.C.C. gap filler.165

That is what the court did: Thus, the court eliminated the conflicting warranty terms, and it replaced the conflicting terms with a warranty of “reasonable” duration.166

B. Conduct Recognizing a Contract In many cases, goods are shipped, accepted, and paid for before any dispute arises. In such cases, the existence of a contract is undisputed, even if the parties’ writings do not establish a contract. Consequently, it is unnecessary to identify the offer and acceptance. The only question is what terms are included in the contract. The U.C.C., section 207(3), furnishes the governing rule:

Conduct 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. 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 Act.167

In Big Farmer, Inc. v. Agridata Resources, Inc., the plaintiff provided the defendant with mailing lists and demographic information that the defendant used to increase circulation of its publications. 168 A dispute arose over the price.169 The court noted that the parties’ conduct recognized the existence of a contract and the applicability of section 2- 207(3), the court stated:

In the case at bar, the only point at issue is the manner in which the amount due on the contract is to be calculated. . . . Since these terms are in conflict, they ‘knock-out’ each other and are treated as if the parties said nothing as to price. In such a case, U.C.C. 2-305 sets ‘a reasonable price at the time of delivery’ as the amount to be paid.170

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In Hays v. General Electric Co., the parties’ exchange of forms did not establish a contract.171 GE delivered motors and the plaintiff paid some of the invoices.172 That conduct established the existence of a contract.173 The court stated:

[T]he writings agree on the terms of price, quantity, place and time of delivery, but disagree on warranties, among other things. The express warranty provisions as to merchantability and fitness fall out, but are replaced by similar implied warranties under U.C.C. §§ 2-314 and 2-315.174

C. Material Alteration of Terms What type of additional term is considered a material alteration? One court suggested a term is material “if consent to it cannot be presumed.” 175 Another has characterized it as one which would constitute an “unreasonable surprise” to one of the bargaining parties.176 Several courts have defined a material alteration as one that would “result in surprise or hardship if incorporated without express awareness by the other party.”177 In any case, the party who opposes including the additional term in the contract has the burden of proving that it is a material alteration.178

In Barliant v. Follet Corp., the plaintiff claimed that the defendant overcharged for shipments of books by including a charge on the invoice designated as “BKPST TRANS-INS” (bookpost, transportation, and insurance).179 The issue on appeal was whether the additional charges on the invoice became part of the contract, or were material alterations that did not become part of the contract.180 After noting that the additional charges were clearly marked on the invoice and that the plaintiff had paid the invoices in full on 24 consecutive occasions over an 18-month period, the court concluded the additional charges did not constitute “unreasonable surprise” and were part of the contract.181 According to the U.C.C., examples of typical clauses that would normally “materially alter” contracts are:

(1) a clause negating such standard warranties as that of merchantability or fitness for a particular purpose in circumstances in which either warranty normally attaches;182 (2) a clause requiring a guaranty of 90% or 100% deliveries in a case such as a contract by cannery, where the usage of the trade allows greater quantity leeways;183 (3) a clause reserving to the seller the power to cancel upon the buyer’s failure to meet any invoice when due;184 (4) a clause requiring that complaints be made in a time materially shorter than customary or reasonable.185

In addition, a sales tax indemnity, an indemnification clause, a limitation of damages clause, and attorney’s fees have been found to be material alterations.186 According to the U.C.C., examples of clauses that involve no element of unreasonable surprise and therefore are to be incorporated in the contract unless notice of objection is reasonably given are:

(1) a clause setting forth and even enlarging slightly upon the seller’s exemption from performance due to supervening causes beyond his control, similar to those covered by the provision of this Article on merchant’s excuse by failure of presupposed conditions or a clause fixing in advance any reasonable formula of proration under such circumstances;187

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(2) a clause fixing a reasonable time for complaints within customary limits, or in the case of a purchase for sub- sale, providing for inspection by the sub-purchaser;188 (3) a clause providing for interest on overdue invoices or fixing the seller’s standard credit terms where they are within the range of trade practice and do not limit any credit bargained for;189 (4) a clause limiting the right of rejection for defects which fall within the customary trade tolerances for acceptance “with adjustment” or otherwise limiting remedy in a reasonable manner.190

A provision allowing a price increase for future shipments and for prejudgment interest was not a material alteration of the contract.191 Reading the U.C.C. is easy, but applying its provisions is a different story as evidenced by the inconsistent positions the First District has taken on whether limitation of remedy language is a material alteration under 810 ILCS 5/2-207. In Album Graphics, Inc. v. Beatrice Foods Co. the plaintiff sued the defendant for breach of warranty when a weak adhesive that was purchased from the defendant caused the plaintiff’s packages to come undone.192 The defendant argued that the warranty disclaimer and remedy limitations included on the glue container labels, as well as the shipping invoices, limited the plaintiff’s damages to the purchase price of the glue.193 The Album Graphics court held, after assuming the parties formed their contract prior to delivery of the product, under section 207:

A term disclaiming warranties, and we might add a term limiting remedies, is undoubtedly a term that materially alters a contract. (Citation omitted.) Thus . . . we necessarily conclude that neither the disclaimer of warranties language nor the limitation of remedies language could become part of the contract under section 2-207(2).194

The holding in Album Graphics that the addition of a limitation of remedies provision is always a material alteration under 2-207(2) was called into question in Intrastate Piping & Controls, Inc. v. Robert-James Sales, Inc. In Intrastate Piping, a buyer sued a seller and pipe manufacturer for the cost of removing and replacing allegedly defective pipe.195 As in Album Graphics, the parties disputed whether a disclaimer of warranties and remedy limitation were included in the sales contract due to disagreement over the time the parties made an agreement. The Intrastate Piping court held that regardless of the time of contract formation, the “remedy limitations became part of the contracts by operation of statute” because the buyer failed to seasonably object to it.196 In reaching its decision, the Intrastate Piping court rejected the Album Graphics court’s determination that a remedy limitation is a per se material alteration of a sales contract under section 207.197 The Intrastate Piping court noted that the Album Graphics court had cited Comment 4 of 207 but had ignored Comment 5 which listed “limiting remedy in a reasonable manner” as a clause which involves “no element of unreasonable surprise and which therefore are to be incorporated in the contract unless notice of objection is reasonably given.”198 The conflict between Album Graphics and Intrastate Piping was addressed in Southern Illinois Riverboat Casino Cruises, Inc. v. Triangle Insulation & Sheet Metal Co.199 In Southern Illinois Riverboat Casino Cruises (Casino Cruises), the owner of a casino vessel brought an action against the seller of a sealant that allegedly caused customers to become sick and the casino vessel to be closed for several days.200 Like Album Graphics and Intrastate Piping, the parties in Casino Cruises disputed whether a remedy limitation on the containers of sealant was part of the contract.201

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In reaching its decision, the court in Casino Cruises discussed the conflict between Album Graphics and Intrastate Piping.202 The Casino Cruises court noted Album Graphics’ failure to consider Comment 5 of section 207 and rejected Album Graphics stating:

Having carefully considered the holdings of both cases, we believe there is a compelling reason to doubt the correctness of the Album Graphics decision, at least as it pertains to remedy limitations, given the plain meaning of Comment 5.203

The Casino Cruises court decided that the remedy limitation was part of the parties’ sales contract.204

Conclusion

Part two of Article 2 of the U.C.C. is entitled “Form, Formation and Readjustment of Contract,” which include sections 2-201 through 2-210. Those sections, as well as comments to those sections, should be the foundation for prosecuting or defending any commercial breach of contract claim involving the sale of goods. If the issue is whether there is a contract, turn to section 2-204. If you anticipate a battle of the forms, turn to section 2-207. If your analysis starts with the U.C.C., you cannot go wrong.

(Endnotes)

1 810 ILCS 5/1-101.

2 810 ILCS 5/2-102.

3 810 ILCS 5/2-105 (1).

4 Big Farmer, Inc. v. Agridata Res., Inc., 221 Ill. App. 3d 244, 246 (3rd Dist. 1991).

5 Belleville Toyota, Inc. v. Toyota Motor Sales, U.S.A., Inc., 199 Ill. 2d 325, 352-53 (2002).

6 Belleville Toyota, Inc., 199 Ill. 2d at 352-53.

7 Id.

8 Monetti, S.P.A. v. Anchor Hocking Corp., 931 F.2d 1178, 1184 (7th Cir. 1991).

9 In Re Yasmin & Yaz (Drospirenone) Mktg. Sales, Practices & Prods. Liab. Litig., 692 F. Supp. 2d 1012, 1023 (S.D. Ill. 2010); aff’d, Walton v. Bayer Corp., 643 F.3d 994 (7th Cir. 2011).

10 810 ILCS 5/2-201(1).

11 Cohen v. Wood Bros. Steel Stamping Co., 175 Ill. App. 3d 511, 516 (1st Dist. 1988).

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12 Architectural Metal Sys., Inc. v. Consol. Sys., Inc., 58 F.3d 1227, 1230-31 (7th Cir. 1995).

13 Cent. Ill. Light Co. v. Consolidation Coal Co., 349 F.3d 488, 489 (7th Cir. 2003).

14 Cent. Ill. Light Co., 349 F.3d at 489.

15 Id. at 490-91.

16 810 ILCS 5/2-104(3).

17 810 ILCS 5/2-201(2).

18 810 ILCS 5/2-201(3)(a).

19 810 ILCS 5/2-201(3)(b).

20 810 ILCS 5/2-201(3)(c).

21 Monetti, S.P.A., 931 F.2d at 1181.

22 810 ILCS 5/1-201(b)(3).

23 810 ILCS 5/1-201(b)(12).

24 Pers. Fin. Co. v. Meredith, 39 Ill. App. 3d 695, 702 (5th Dist. 1976).

25 810 ILCS 5/2-204(1).

26 Gen. Motors Acceptance Corp. v. Johnson, 354 Ill. App. 3d 885, 892 (1st Dist. 2004).

27 Melena v. Anheuser-Busch, Inc., 219 Ill. 2d 135, 151 (2006).

28 A. Epstein & Sons Int’l, Inc. v. Eppstein Uhen Architects, Inc., 408 Ill. App. 3d 714, 720 (1st Dist. 2011).

29 McCarty v. Verson Allsteel Press Co., 89 Ill. App. 3d 498, 507 (1st Dist. 1980).

30 Ace Am. Ins. Co. v. Wendt, LLP, 724 F. Supp. 2d 899, 902 (N.D. Ill. 2010).

31 Ace Am. Ins. Co., 724 F. Supp. 2d at 902.

32 Rush-Presbyterian-St. Luke’s Med. Ctr. v. Gould Inc., No. 93-C-1661, 1995 WL 340967, at *5 (N.D. Ill. June 2, 1995).

33 Quaker St. Mushroom Co., Inc. v. Domi-nick’s Finer Foods, Inc., 635 F. Supp. 1281, 1284 (N.D. Ill. 1986).

34 Rush-Presbyterian-St. Luke’s Med. Ctr., 1995 WL 340967, at *5.

35 Quaker St. Mushroom Co., Inc., 635 F. Supp. at 1284.

36 McCarty, 89 Ill. App. 3d at 500.

37 Id.

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38 Id. at 501-04.

39 Id. at 506.

40 Id. at 506-07.

41 RESTATEMENT (SECOND) OF CONTRACTS § 50 (1981).

42 810 ILCS 5/2-206(1)(a).

43 810 ILCS 5/2-206, cmt. 1.

44 Id.

45 All Am. Roofing, Inc. v. Zurich Am. Ins. Co., 404 Ill App. 3d 438, 459 (1st Dist. 2010).

46 Beard Implement Co., Inc. v. Krusa, 208 Ill. App. 3d 953, 962 (4th Dist. 1991).

47 Beard Implement Co., Inc., 208 Ill. App. 3d at 962.

48 Id. at 954.

49 Id.

50 Id. at 962.

51 McCarty, 89 Ill. App. 3d at 510.

52 810 ILCS 5/2-207(1).

53 Architectural Metal Sys., 58 F.3d at 1230.

54 Id.

55 Zinni v. Royal Lincoln-Mercury, Inc., 84 Ill. App. 3d 1093, 1094 (1st Dist. 1980).

56 Zinni, 84 Ill. App. 3d at 1093-94.

57 Id. at 1095.

58 Echo, Inc. v. Whitson Co., Inc., 121 F.3d 1099, 1101 (7th Cir. 1997).

59 Echo, 121 F.3d at 1101.

60 Id.

61 Id. at 1103.

62 810 ILCS 5/2-606.

63 810 ILCS 5/2-606, cmt. 3.

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64 Lorenzo Banfi di Banfi Renzo & Co. v. Davis Congress Shops, Inc., 568 F. Supp. 432, 433 (N.D. Ill. 1983).

65 Softa Grp., Inc. v. Scarsdale Dev., 260 Ill. App. 3d 450 (1st Dist. 1993).

66 Softa Grp., 260 Ill. App. 3d at 451.

67 Id.

68 Id.

69 Id. at 454.

70 Sherwin-Williams Co. v. Mark Charcoal Co., Inc., No. 80-C-4541, 1985 WL 3932 (N.D. Ill. 1985).

71 Sherwin-Williams Co., 1985 WL 3932, at *2-3.

72 See Academy Chi. Publishers v. Cheever, 144 Ill. 2d 24, 30 (1991).

73 Midwest Builder Distrib. Inc. v. Lord and Essex, Inc., 383 Ill. App. 3d 645, 658 (1st Dist. 2007).

74 Milex Prods., Inc. v. Alra Lab., Inc., 237 Ill. App. 3d 177, 188 (2nd Dist. 1992).

75 Jannusch v. Naffziger, 379 Ill. App. 3d 381, 386 (4th Dist. 2008).

76 810 ILCS 5/2-204.

77 Luria Bros. & Co., Inc. v. Pielet Bros. Scrap Iron & Metal, Inc., 600 F.2d 103, 106-08 (7th Cir. 1979).

78 Luria Bros & Co., Inc., 600 F.2d at 107.

79 Id. at 108.

80 Id.

81 Id.

82 Architectural Metal Sys. Inc., 58 F.3d at 1229.

83 Cohen, 175 Ill. App. 3d at 512-13.

84 Id. at 516.

85 Melena, 219 Ill. 2d at 151.

86 McInerney v. Charter Golf, Inc., 176 Ill. 2d 482, 486 (1997).

87 Midwest Builder Distrib., Inc., 383 Ill. App. 3d at 658.

88 Chonowski v. Dyke, 82 Ill. App. 3d 802, 805 (3rd Dist. 1980).

89 Hamilton Bancshares, Inc. v. Leroy, 131 Ill. App. 3d 907, 911 (4th Dist. 1985) (citing Steinberg v. Chi. Med. Sch., 69 Ill. 2d 320 (1977)).

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90 Gallagher v. Lenart, 226 Ill. 2d 208, 243 (2007).

91 Gavery v. McMahon & Elliott, 283 Ill. App. 3d 484, 490 (1st Dist. 1996).

92 Goodwine St. Bank v. Mullins, 253 Ill. App. 3d 980, 1011 (4th Dist. 1993).

93 United City of Yorkville v. Vill. of Sugar Grove, 376 Ill. App. 3d 9, 22 (2nd Dist. 2007).

94 Dohrmann v. Swaney, 2014 IL App (1st) 131524, at ¶ 23.

95 Keefe v. Allied Home Mortg. Corp., 393 Ill. App. 3d 226, 230 (5th Dist. 2009).

96 Carter v. SSC Odin Operating Co., LLC, 2012 IL 113204, ¶ 20.

97 Gonzales v. W. Suburban Imps., Inc., 411 F. Supp. 2d 970, 971 (N.D. Ill. 2006).

98 Gonzales, 411 F. Supp. 2d at 971.

99 Id. at 971-72.

100 Id. at 972.

101 Id. at 973.

102 DiLorenzo v. Valve & Primer Corp., 347 Ill. App. 3d 194, 201 (1st Dist. 2004).

103 White v. Vill. of Homewood, 256 Ill. App. 3d 354, 355-56 (1st Dist. 1993).

104 White, 256 Ill. App. 3d at 355-56.

105 Id. at 357.

106 Id.

107 Gen. Motors Acceptance Corp., 354 Ill. App. 3d at 894.

108 Curtis 1000, Inc. v. Suess, 843 F. Supp. 441, 450 (C.D. Ill. 1994), aff’d, Curtis 1000, Inc. v. Suess, 24 F.3d 941 (7th Cir. 1994).

109 Kalis v. Colgate-Palmolive Co., 337 Ill. App. 3d 898, 901 (1st Dist. 2003).

110 Kalis, 337 Ill. App. 3d at 901.

111 Tower Investors, LLC v. 111 E. Chestnut Consultants, Inc., 371 Ill. App. 3d 1019, 1027-28 (1st Dist. 2007).

112 Carlton at the Lake, Inc. v. Barber, 401 Ill. App. 3d 528, 531 (1st Dist. 2010).

113 810 ILCS 5/2-201.

114 J.P. Sivertson & Co. v. Lolmaugh, 63 Ill. App. 3d 724, 727 (2nd Dist. 1978); 810 ILCS 5/1-201(37).

115 Cloud Corp. v. Hasbro, Inc., 314 F.3d 289, 296 (7th Cir. 2002).

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116 Prignano v. Prignano, 405 Ill. App. 3d 801, 810 (2nd Dist. 2010).

117 Heuerman v. B&M Constr., Inc., 358 Ill. App. 3d 1157, 1165 (5th Dist. 2005).

118 Comark Merch., Inc. v. Highland Grp., Inc., 932 F.2d 1196, 1200 (7th Cir. 1991).

119 Magee v. Garreau, 332 Ill. App. 3d 1070, 1076 (2nd Dist. 2002); Echo, Inc., 121 F.3d at 1102.

120 Avery v. St. Farm Mut. Auto. Ins. Co., 216 Ill. 2d 100, 129 (2005).

121 Dohrmann, 2014 IL App (1st) 131524, ¶ 23; Cohen, 175 Ill. App. 3d at 515.

122 Wheeler-Dealer, Ltd. v. Christ, 379 Ill. App. 3d 864, 871 (1st Dist. 2008).

123 Mid-Century Ins. Co. v. Founders Ins. Co., 404 Ill. App. 3d 961, 967 (1st Dist. 2010).

124 Vill. of Oak Park v. Schwerdtner, 288 Ill. App. 3d 716, 718 (1st Dist. 1997).

125 Bd. of Educ. of Plainfield Cmty. Consol. Sch. Dist. 202 v. Ill. State Bd. of Educ., No. 13 C 2043, 2014 WL 1245086, at *3 (N.D. Ill. Mar. 26, 2014.

126 United City of Yorkville, 376 Ill. App. 3d at 24; Corcoran v. Ne. Ill. Reg’l Commuter R.R. Corp., 345 Ill. App. 3d 449, 454 (1st Dist. 2003).

127 Stewart v. Thrasher, 242 Ill. App. 3d 10, 18 (4th Dist. 1993).

128 Brzozowski v. N. Trust Co., 248 Ill. App. 3d 95, 100 (1st Dist. 1993).

129 John J. Calnan Co. v. Talsma Builders, Inc., 67 Ill. 2d 213, 218 (1977).

130 Cummings v. Dusenbury, 129 Ill. App. 3d 338 (2nd Dist. 1984).

131 Cummings, 129 Ill. App. 3d at 339.

132 Id. at 344.

133 Id.

134 Id. at 344-45.

135 Id.

136 Bruner v. Ill. Cent. R. Co., 219 Ill. App. 3d 177, 180 (5th Dist. 1991).

137 Vill. of Oak Park v. Schwerdtner, 288 Ill. App. 3d 716 (1st Dis. 1997).

138 Jursich v. Arlington Heights Fed. Sav. & Loan Ass’n, 110 Ill. App. 3d 847 (2nd Dist. 1982).

139 Quaker Alloy Casting Co. v. Gulfco Indus., Inc., 686 F. Supp. 1319, 1333 (N.D. Ill. 1988).

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140 Nomanbhoy Family Ltd. Par’ship v. McDonald’s Corp., 579 F. Supp. 2d 1071, 1092 (N.D. Ill. 2008).

141 Finnin v. Bob Lindsay, Inc., 366 Ill. App. 3d 546, 548 (3rd Dist. 2006).

142 Big Farmer, Inc., 221 Ill. App. 3d at 246-47.

143 810 ILCS 5/2-207(1).

144 Album Graphics, Inc. v. Beatrice Foods Co., 87 Ill. App. 3d 338 (1st Dist. 1980).

145 Gord Indus. Plastics, Inc. v. Aubrey Mfg., Inc., 103 Ill. App. 3d 380, 385 (2nd Dist. 1982).

146 Hessler v. Crystal Lake Chrysler-Plymouth, Inc., 338 Ill. App. 3d 1010, 1013 (2nd Dist. 2003).

147 Hessler, 338 Ill. App. 3d at 1013.

148 Id. at 1013-16.

149 Id. at 1017.

150 Id. at 1018.

151 Deere & Co. v. Ohio Gear, 462 F.3d 701, 707 (7th Cir. 2006).

152 Deere & Co., 462 F.3d at 707.

153 Chemtoy Corp., 19 B.R. 475, 479 (N.D. Ill. 1982).

154 Hays v. Gen. Elec., Co., 151 F. Supp. 2d 1001, 1008 (N.D. Ill. 2001).

155 810 ILCS 5/2-207(2).

156 Union Carbide Corp. v. Oscar Mayer Foods Corp., 947 F.2d 1333, 1337 (7th Cir. 1991).

157 Cloud Corp., 314 F.3d at 294-95.

158 Northrop Corp. v. Litronic Indus., 29 F.3d 1173 (7th Cir. 1994).

159 Northrop Corp., 29 F.3d at 1175.

160 Id.

161 Id.

162 Id. at 1177.

163 Id. at 1176.

164 Id. at 1177.

165 Id. at 1178.

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166 Id. at 1179.

167 810 ILCS 5/2-207(3).

168 Big Farmer, Inc., 221 Ill. App. 3d at 245.

169 Id. at 245-46.

170 Id. at 247.

171 Hays, 151 F. Supp. 2d at 1009.

172 Id.

173 Id.

174 Id.

175 Union Carbide Corp., 947 F.2d at 1336.

176 Clifford-Jacobs Forging Co. v. Capital Eng’g & Mfg. Co., 107 Ill. App. 3d 29, 33 (4th Dist. 1982).

177 Comark Merch., Inc., 932 F.2d at 1201; See also Chi. Litho Plate Graining Co., Ltd. v. Allstate Can Co., 838 F.2d 927, 931 (7th Cir. 1988).

178 Comark Merch., Inc., 932 F.2d at 1201.

179 Barliant v. Follett Corp., 138 Ill. App. 3d 756, 757 (1st Dist. 1985).

180 Barliant, 138 Ill. App. 3d at 760.

181 Id. at 762.

182 810 ILCS 5/2-207, cmt. 4.

183 Id.

184 Id.

185 Id.

186 Union Carbide Corp., 947 F.2d at 1337-38; Trans. Aire Int’l v. N. Adhesive Co., 882 F. 2d 1254, 1263 (7th Cir. 1989); Schumacher Elec. Corp. v. CTS Corp., No. 89 C 5262, 1991 WL 156212, at *4 (N.D. Ill. Aug. 6, 1991); Comark Merch., Inc., 932 F. 2d at 1203.

187 810 ILCS 5/2-207, cmt. 5

188 Id.

189 Id.

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190 Id.

191 Clifford-Jacobs Forging Co., 107 Ill. App. 3d at 33; Extel Corp. v. Cermetek Microelectronics, Inc., 183 Ill. App. 3d 688, 692-93 (1st Dist. 1989).

192 Album Graphics, Inc. v. Beatrice Foods Co., 87 Ill. App. 3d 338, 339-40 (1st Dist. 1980).

193 Album Graphics, Inc., 87 Ill. App. 3d at 341.

194 Id. at 347.

195 Intrastate Piping & Controls, Inc. v. Robert-James Sales, Inc., 315 Ill. App. 3d 248 (1st Dist. 2000).

196 Intrastate Piping & Controls, Inc., 315 Ill. App. 3d at 254.

197 Id. at 255.

198 Id.

199 S. Ill. Riverboat Casino Cruises, Inc. v. Triangle Insulation and Sheet Metal Co., 302 F.3d 667 (7th Cir. 2002).

200 S. Ill. Riverboat Casino Cruises, Inc., 302 F.3d at 671.

201 Id. at 673.

202 Id at 673-74.

203 Id. at 675.

204 Id. at 676.

About the Author John J. O’Malley is a partner in the Chicago office of Seyfarth Shaw LLP and has over 35 years of experience in commercial litigation, professional liability, product liability, and tort defense. Mr. O’Malley is the current vice chair of the Commercial Law Committee and the past co-chair of the Civil Practice Committee of the IDC, a past chair of the Civil Practice Committee of the Chicago Bar Association, and a past chair of the Insurance Law Section Council of the Illinois State Bar Association. He is a member of the DRI and the Litigation and Tort and Insurance Practice Sections of the American Bar Association and the Lawyer’s Club of Chicago. Mr. O’Malley received his undergraduate degree from the College of the Holy Cross and received his J.D., cum laude, from DePaul University where he was a member of the law review. A former law clerk for Justice John J. Stamos of the Illinois Appellate Court, Mr. O’Malley has served as a lecturer at the John Marshall School of Law. He is the author of a number of articles on litigation and tort law and is a frequent workshop panelist and lecturer on litigation.

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About the IDC The Illinois Association Defense Trial Counsel (IDC) is the premier association of attorneys in Illinois who devote a substantial portion their practice to the representation of business, corporate, insurance, professional and other individual defendants in civil litigation. For more information on the IDC, visit us on the web at www.iadtc.org or contact us at PO Box 588, Rochester, IL 62563-0588, 217-498-2649, 800-232-0169, [email protected].

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