Martin Silver is a practicing attorney with offices in Hauppauge, N.Y. He was a flooring installer before and during the time he went to law school and has since represented numerous industry people and companies. To contact him, call 631-435-0700.
Terms of sale
Most flooring dealers purchase goods from their suppliers by simply picking up the phone. In many cases the goods are immediately shipped out pursuant to this telephone or faxed order without any written purchase order, confirmation or acknowledgement. Often, the only written document that refers to this order is the invoice which is mailed by the mill to the dealer.
As we've all noticed, many of these invoices contain all kinds of clauses that are supposedly made a part of the contract of the sale between the dealer and that mill of the goods referred to on the invoice. Often, one of these clauses state the liability of the mill, in the event the goods are found to be defective, will be limited to replacement of the goods only. Other times, these clauses will limit the time within which a dealer may complain or sue. Still other clauses will limit a seller's recourse to an arbitration proceeding, or will otherwise effect the buyer's obligation to pay for those goods.
Are these clauses, apparently unilaterally put in by the seller, really made a part of the agreement, or are they merely wishful thinking by that seller who can then convince the dealer they must be binding since they are on a printed form? Although there is no simple answer to this question, there are some general rules found in the Uniform Commercial Code, including which written or oral, documents or statements are actually a part of the agreement, and which ones are not.
One of these rules states a written confirmation of an order which is sent within a reasonable time of an offer, operates as an acceptance of that particular offer even though it may contain terms that differ from the original offer. These additional terms, if the sale is between merchants, become a part of the agreement unless (a) the offer expressly limits acceptance to the terms of the offer; (b) they materially alter it, or (c) they are immediately objected to after receipt of the confirmation.
To see how this works, we'll take a look at a recent case between a dealer and the manufacturer it purchased goods from. This dealer placed a phone order for certain goods, which were immediately shipped to him by the manufacturer. An invoice was mailed a week later, which was promptly paid by the buyer. The goods, however, turned out to be defective, and after unsuccessfully attempting to resolve this with the manufacturer for approximately one-and-a-half years, the dealer sued for various damages, including, but not limited to, the price paid. The manufacturer defended this action upon its claim that the contract of sale for the purchase in question specifically stated that any lawsuits were barred if they were not commenced within one year of the delivery. Although the normal statue of limitations is four years, the mill has claimed since it put language in its invoice modifying that to one year, it was binding.
The judge agreed with the seller and dismissed the buyer's lawsuit because it had not been brought within the "agreed to" one-year period. The buyer felt this decision was unjust and appealed it to the state's second-highest court. The five-judge panel there determined the first judge was wrong. They held the terms of the invoice, including the one-year limitation on lawsuits, were "not binding upon the purchaser because the invoice was not sent within a reasonable time within the meaning of the Uniform Commercial Code."
If it is important to you that something be included, or excluded, in such an agreement, you must put it in writing immediately, and you must, in writing, immediately respond to anything received from the other party.
Edited by Admin 4/21/2008