Earl M. Jorgensen Co. v. Mark Const., Inc.
| Decision Date | 30 September 1975 |
| Docket Number | No. 5543,5543 |
| Citation | 56 Haw. 466,540 P.2d 978 |
| Parties | , 17 UCC Rep.Serv. 1126 EARL M. JORGENSEN CO., Plaintiff and Counterclaim Defendant-Appellee, v. MARK CONSTRUCTION, INC., Defendant and Counterclaimant-Appellant. |
| Court | Hawaii Supreme Court |
Syllabus by the Court
1. Depending upon the particular facts and circumstances surrounding its issuance, a quotation may constitute an offer if it sets forth all the terms necessary to constitute a binding contract upon acceptance.
2. A limitation of remedies clause is an essential part of an offer and requires mutual assent by the parties in order to be part of a binding contract.
3. Assent to and acceptance of the terms of an offer is determined from the objective manifestations of the accepting party.
4. Under the pre-Uniform Commercial Code 'mirror-image' rule, a purported acceptance of an offer which attempted to modify one of more terms was a rejection of the offer and a counteroffer.
5. The Code now provides that a definite and seasonal expression of acceptance or a written confirmation is an acceptance and is a counteroffer only as to additional or different terms. HRS § 490:2-207.
6. Where the court finds a contract, or any clause thereof, to have been unconscionable at the time it was made, it may refuse to enforce the contract, or delete the unconscionable clause, or limit its application to avoid any unconscionable result. HRS § 490:2-302(1).
7. The Code hearing requirement on the issue of unconscionability is satisfied if a reasonable opportunity to present evidence as to a contract's commercial setting, purpose and effect is provided in a hearing on a motion for summary judgment. HRS § 490:2-302(2).
8. On appeal, a judgment will not ordinarily be reversed upon a legal theory not raised in the lower court, unless and until justice otherwise requires.
9. The Uniform Commercial Code permits the limitation of remedies available to a buyer, as well as the exclusion of consequential damages, provided that such exclusion is not unconscionable. HRS § 490:2-719.
10. A limitation of remedy clause fails of its essential purpose and is of no effect when goods contain latent defects that are not discoverable within a reasonable time such that there is no minimum adequate remedy provided as required by the Code; or when the party obligated to provide the limited remedy contracted for, by its action or inaction, causes the remedy to fail.
Frank D. Padgett, Honolulu (Alan M. Goda, Honolulu, with him on the briefs, Padgett, Greeley, Marumoto & Steiner, Honolulu, of counsel), for defendant and counterclaimant-appellant.
Wallace Klein, Honolulu (Jared H. Jossem, Charles E. Murphy, Honolulu, with him on the brief, Torkildson, Katz & Conahan, Honolulu, of counsel), for plaintiff counterclaim defendant-appellee.
Before RICHARDSON, C. J., KOBAYASHI, OGATA and MENOR, JJ., and WONG, Circuit Judge, assigned by reason of vacancy.
This case arises out of a contract for the sale of some 3,468 lineal feet of sectional steel plate. The seller-appellee, Earl M. Jorgensen Co., sued the purchaser-appellant, Mark Construction, Inc., for the unpaid balance of the purchase price. Mark counterclaimed for damages allegedly resulting from Jorgensen's failure to supply material conforming to specifications. Jorgensen moved for summary judgment on the counterclaim, contending that its liabilities were limited under the contract. The trial court granted the motion, but allowed Mark to file this interlocutory appeal.
The point in dispute concerns the terms and provisions constituting the contract between the parties. More specifically, at issue is whether the limitation of liability clause asserted by Jorgensen was part of the contract, and if so, (1) whether the limitation of liability clause was unconscionable, and (2) whether Mark's remedy as provided in the contract had failed of its essential purpose.
In order to prepare a bid for a State project involving a two-mile segment of the H-2 Freeway, Mark contacted Hawaii Pipe and Jorgensen, to obtain quotations for the sectional plate it would require in the event its bid was accepted. Both companies responded with written quotations. Jorgensen's quotation for the materials, dated June 8, 1970, was the lower of the two by approximately $25,000. Mark submitted its bid to the State on June 12, 1970. On July 10, 1970, Jorgensen sent Mark a second written quotation, on the same form as the first and identical thereto, except that the total purchase price of the material was reduced by approximately $5,000. Mark was awarded the State contract on July 12, 1970. At the request of Jorgensen, Mark issued its purchase order, based on the second quotation, on July 15, 1970. The quotations were signed by Mike Durant for Jorgensen, and the purchase order by Modesto Gaborno for Mark.
We must determine at the outset whether either of the Jorgensen quotations constituted an offer which was accepted by Mark when it issued its purchase order, or whether the purchase order was the offer which was accepted by Jorgensen when it began to act in reliance upon the purchase order.
Whether a quotation constitutes an offer or merely an invitation to make an offer necessarily depends upon the terms of the quotation and the facts and circumstances surrounding its issuance. Nickel v. Theresa Farmers Coop. Ass'n., 247 Wis. 412, 20 N.W.2d 117 (1945); Robert Gordon, Inc. v. Ingersoll-Rand Co., 117 F.2d 654 (7th Cir. 1941).
We are satisfied, from the undisputed evidence, that the second quotation of July 10, 1970, was an offer which was accepted by Mark when it issued its purchase order in July 15, 1970. The quotation set forth all the terms necessary to constitute a binding contract upon acceptance. The course of dealing between the parties evidenced an intention to treat the second quotation as an offer. After receiving the original quotations from Hawaii Pipe and Jorgensen, Mark decided to reject Hawaii Pipe's and opted instead for the Jorgensen proposal. In preparing its bid for the State project, it used the first Jorgensen quotation as a basis for calculating its own bid proposal to the State. Mark submitted its bid to the State on June 12, 1970. On July 10, 1970, Jorgensen sent Mark the second written quotation, identical to the first, except that the total purchase price of the material had been reduced. Mark was awarded the State contract on July 12, 1970. A few days later, Mr. Durant called Mr. Gaborno, who had been acting for Mark in the negotiations, and asked for a purchase order because Jorgensen was anticipating a price increase in steel and wanted the order to protect itself from the rise in price. If anything, this act on the part of Jorgensen, through Durant, was a reaffirmation of its offer to sell the material to Mark in accordance with its second quotation. After consulting with Mark's president, Mr. Gaborno issued the purchase order on July 15, 1970. Mark, by then, had made its own contractual commitments to the State. It had already obligated itself to perform certain construction work within deadlines established in its contract. It had bid on the project on the basis of the price quotations from Jorgensen, and it needed the materials which had to be delivered at the times and places specified. The terms of the quotation were specially designed to enable Mark to meet the State's contractual specifications, and the purchase order had the effect of assuring Mark the material with which to fulfill its contractual obligations. The purchase order described the plates to be furnished, the purchase price, the terms of payment, and the time and place of delivery, essentially as contained in the quotation of July 10, 1970.
The limitation of liability provision was an essential part of Jorgensen's offer. The quotation of June 8, 1970, contained the disputed provision. So also did the quotation of July 10, 1970. Both quotations were on single sheet printed forms entitled 'QUOTATION.' The front side of each form contained a description of the quantity and type of sectional plate to be furnished, the price, the terms of payment, and the place of delivery. Both were signed by Mike Durant for Jorgensen. At the bottom of the front page appeared the following which were printed in block capital letters:
NOTICE-PROVISIONS PRINTED ON THE REVERSE SIDE HEREOF COMPRISE ADDITIONAL TERMS OF THIS CONTRACT LIMITING THE SELLER'S WARRANTY OBLIGATION AND EXCLUDING LIABILITY FOR CONSEQUENTIAL DAMAGES.
On the reverse side, among other provisions, was the following:
LIMITATION OF WARRANTY LIABILITY
Seller hereby warrants that the material described herein conforms to specifications. Seller's liability is expressly limited to replacement of defective material or refund of purchase price to the original purchaser, at Seller's option, when material is properly worked or used within a reasonable time. In no event shall Seller be liable for any labor claims or special, indirect, consequential or other damages, whether arising under any warranty, express or implied, or otherwise, and the remedies of Buyer expressed herein are exclusive. Anything contained in prior or subsequent communications between Buyer and Seller which purports to alter this provision shall be void and is superseded by this provision. This warranty is made in lieu of all other express and implied warranties, including any implied warranty of merchantability or fitness for a particular purpose, and of any other obligations or liability on the part of Seller. Seller neither assumes nor authorizes any person to assume for it any liability not expressed herein.
Mark's purchase order made no reference whatsoever to this limitation of warranty liability provision, nor to any of the other printed provisions.
There must be a mutual assent or a meeting of the minds on all essential elements or terms to create a binding contract. Carson v. Saito, 53 Haw. 178, 489 P.2d 636 (1...
To continue reading
Request your trial
-
Shanghai Inv. Co., Inc. v. Alteka Co., Ltd., No. 20709.
...884 P.2d 345, 353 (1994) (quoting State v. Fox, 70 Haw. 46, 56 n. 2, 760 P.2d 670, 676 n. 2 (1988) (citing Jorgensen v. Mark Constr., Inc., 56 Haw. 466, 476, 540 P.2d 978, 985 (1975) (other citations omitted))), reconsideration denied, 77 Hawai`i 489, 889 P.2d 66 III. DISCUSSION A. The tria......
-
Clark v. International Harvester Co.
...39 (N.D.Ill.1970); Kohlenberger, Inc. v. Tyson's Foods, Inc., 256 Ark. 584, 510 S.W.2d 555 (1974); Earl M. Jorgensen Co. v. Mark Constr., Inc., 56 Haw. 466, 540 P.2d 978 (1975); Eckstein v. Cummins, 41 Ohio App.2d 1, 321 N.E.2d 897 (1974); Moore v. Howard Pontiac-American, Inc., 492 S.W.2d ......
-
American Nursery Products, Inc. v. Indian Wells Orchards
...days after receipt of shipment fails of essential purpose if latent defects render yarn unmerchantable); Earl M. Jorgensen Co. v. Mark Constr., Inc., 56 Hawaii 466, 540 P.2d 978 (1975) (alternative remedies of refund and repair/replacement fail because latent defects caused additional THE E......
-
Lales v. Wholesale Motors Co.
...is of great public import." State v. Fox, 70 Haw. 46, 56 n. 9, 760 P.2d 670, 676 n. 9 (1988) ; accord Earl M. Jorgensen Co. v. Mark Const., Inc., 56 Haw. 466, 476, 540 P.2d 978, 985 (1975).No additional facts are required to consider whether Marxen can be held liable under HRS § 378–2(a)(3)......
-
To Have and Have Not: the Application of U.c.c. Section 2-719 to Clauses Limiting Remedy to Repair or Replacement and Excluding Liability
...of conscionability based on actual knowledge of the limiting clause through other means. See Earl M. Jorgensen Co. v. Mark Constr., Inc., 56 Haw. 466, 469-70, 540 P.2d 978, 981-82 (1975) (buyer used quotation form containing clause in preparing purchase order); Kansas City Struct. Steel Co.......