The Weekly Law Reports, April 13, 1979

401
1 W.L.R.
A
[COURT O F APPEAL]

* B U T L E R M A C H I N E TOOL CD. LTD. v. EX-CELL-O

CORPORATION (ENGLAND) LTD.

[1972 B. No. 234]

o
1977 April 25 Lord Denning M.R., Lawton
and Bridge L.J J.

ContractFormationOffer and acceptanceTerms and condi

tionsOrders to be accepted on sellers' termsAcknowledg
ment of order on buyers' termsWhether price variation clause
C in contractUniform Laws on International Sales Act 1967
(c. 45), Sch. 2, art. 7 1
On May 23, 1969, the plaintiff sellers offered to deliver a
machine tool for the price of 75,535. Delivery was to be in
10 months and it was a condition that orders were accepted
only on the terms set out in the quotation which were to prevail
over any terms in the buyers' order. The sellers' terms included
D a price variation clause whereby it was a condition of accept
ance that goods would be charged at prices ruling at date of
delivery. The defendant buyers replied on May 27, 1969, giving
an order with differences from the sellers' quotation and with
their own terms and conditions which had no price variation
clause. The order had a tear-off acknowledgment for sig
nature and return which accepted the order " on the terms
and conditions thereon." On June 5, 1969, the sellers, after
E acknowledging receipt of the order on June 4, returned the
acknowledgment form duly completed with a covering letter
stating that delivery was to be " in accordance with our
revised quotation of May 23 for delivery in . . . March/April
1970."
The machine was ready about September 1970, but the
buyers could not accept delivery until November 1970. The
sellers invoked the price increase clause and claimed 2,892
F for the increase due to the rise in costs between May 27, 1969,
and April 1, 1970, when the machine should have been
delivered. Thesiger J. gave judgment for the sellers for 2,892
and interest.
On the buyers' appeal:
Held, allowing the appeal, that the buyers' order of May 27,
1969, was not an acceptance of the offer in the sellers' quotation
-, of May 23, but a counter-offer which the sellers had accepted
by their letter of June 5, 1969, when the contract was completed
without any price limitation clause.
Hyde v. Wrench (1840) 3 Beav. 334 and Trollope & Colls
Ltd. v. Atomic Power Constructions Ltd. [1963] 1 W.L.R. 333;
[1962] 3 All E.R. 1035 applied.
Per Lord Denning M.R. The documents passing between the
parties have to be construed as a whole and as a matter of
\\ construction the letter of June 5, 1969, is the decisive document
(post, p. 405E).
Judgment of Thesiger J. reversed.
The following cases are referred to in the judgments:
British Road Services Ltd. v. Arthur V. Crutchley & Co. Ltd. [1968] 1
Lloyd's Rep. 271; [1968] 1 All E.R. 811, C.A.
1
Uniform Uaws on International Sales Act 1967, Sched. 2, art. 7: see post, p. 406B-C.
VOL. 1 21
 The Weekly Law Reports, April 13, 1979
402
Butler Machine Tool v. Ex-Cell-O Corpn. (C.A.) [1979]
Brogden v. Metropolitan Railway Co. (1877) 2 App.Cas. 666, H.L.(E.). A
Hyde v. Wrench (1840) 3 Beav. 334.
New Zealand Shipping Co. Ltd. v. A. M. Satterthwaite & Co. Ltd. [1975]
A.C. 154; [1974] 2 W..L.R. 865; [1974] 1 All E.R. 1015, P.C.
Trollope & Colls Ltd.,y. Atomic Power Constructions Ltd. [1963] 1 W.LiR.
333; [1962] 3 All E.R. 1035.
The following additional cases were cited in argument: B
Davies (A.) & Co. (Shopfitters) Ltd. v. William Old Ltd. (1969) 67 L.G.R.
395.
Gardiner v. Moore [1969] 1 Q.B. 55; [1966] 3 W.L.R. 786; [1966] 1 All
E.R. 365.
APPEAL from Thesiger J. Q
The defendant buyers, Ex-Cell-0 Corporation (England) Ltd., appealed
against the judgment of Thesiger J. on February 12, 1976, in an action
started in the Halifax District Registry, ordering that the defendants pay to
the plaintiffs 2,892 damages, 1,410 interest and costs. The substantial
ground of the appeal was that the judge was wrong in law in finding that
the conditions of sale in the plaintiff sellers quotation and in particular
the price variation clause formed part of the contract between the parties.
The facts are stated in the judgments.

John Griffiths Q.C. and Rex Tedd for the buyers.

Lionel Scott for the sellers.

LORD DENNING M.R. This case is a " battle of forms." The plaintiffs, the E
Butler Machine Tool Co. Ltd., suppliers of a machine, on May 23, 1969,
quoted a price for a machine tool of 75,535. Delivery was to be given in
10 months. On the back of the quotation there were terms and conditions.
One of them was a price variation clause. It provided for an increase in
the price if there was an increase in the costs and so forth. The machine
tool was not delivered until November 1970: By that time costs had increased F
so much that the sellers claimed an additional sum of 2,892 as due to
them under the price variation clause.
The defendant buyers, Ex-Cell-O Corporation (England) Ltd., rejected
the excess charge. They relied on their own terms and conditions. They
said:
" We did not accept the sellers' quotation as it was. We gave an order G
for the self-same machine at the self-same price, but on the back of our
order we had our own terms and conditions. Our terms and conditions
did not contain any price variation clause."
The judge held that the price variation clause in the sellers' form con
tinued through the whole dealing and so the sellers were entitled to rely
upon it. He was clearly influenced by a passage in Anson's Law of Contract, H
24th ed. (1975), pp. 37 and 38, of which the editor.is Professor Guest: and
also by Treitel, The Law of Contract, 4th ed. (1975), p. 15. The judge said
that the sellers did all that was necessary and. reasonable to bring the price
variation clause to the notice of the buyers. He. thought that the buyers
would not "browse over the conditions" of the sellers: and then, by
printed words in their (the buyers') document, trap the sellers into a fixed
:
price contract ::.. . .:." ' -: :. ' ' -' .. . ..- .-..-. :. . '
 The Weekly Law Reports, April 13, 1979
403
1 W.L.R. Butler Machine Tool v. Ex-Cell-O Corpn. (C.A.) Lord Denning M.R.
A I am afraid that I cannot agree with the suggestion that the buyers
" trapped " the sellers in any way. Neither party called any oral evidence
before the judge. The case was decided on the documents alone. I propose
therefore to go through them.
On May 23, 1969, the sellers offered to deliver one " Butier" double
column plane-miller for the total price of 75,535. Delivery 10 months
n (subject to confirmation at time of ordering) other terms and conditions
are on the reverse of this quotation. On the back there were 16 conditions
in small print starting with this general condition:
" All orders are accepted only upon and subject to the terms set out
in our quotation and the following conditions. These terms and
conditions shall prevail over any terms and conditions in the buyer's
order."-
C
Clause 3 was the price variation clause. It said:
" Prices are based on present day costs of manufacture and design and
having regard to the delivery quoted and uncertainty as to the cost
of labour, materials etc. during the period of manufacture, we regret
that we have no alternative but to make it a condition of acceptance
jv of order that goods will be charged at prices ruling upon date of
delivery."
The buyers replied on May 27, 1969, giving an order in these words:
" Please supply on terms and conditions as below and overleaf." Below there
was a list of the goods ordered, but there were differences from the quotation
of the sellers in these respects: (i) there was an additional item for the
g cost of installation, 3,100 and (ii) there was a different delivery date:
instead of 10 months, it was 1011 months.
Overleaf there were different terms as to the cost of carriage: in that
it was to be paid to the delivery address of the buyers: whereas the sellers'
terms were ex warehouse. There were different terms as to the right to
cancel for late delivery. The buyers in their conditions reserved the right
to cancel if delivery was not made by the agreed date: whereas the sellers
F in their conditions said that cancellation of order due to late delivery would
not be accepted.
On the foot of the buyers' order there was a tear-off slip headed:
"Acknowledgment: Please sign and return to Ex-Cell-O. We accept
your order on the terms and conditions stated thereonand undertake
to deliver byDatesigned."
In that slip the delivery date and signature were left blank ready to be
filled in by the sellers.
On June 5, 1969, the sellers wrote this letter to the buyers:
"We have pleasure in acknowledging receipt of your official order
dated May 27 covering the supply of one Butler Double Column
Plane-Miller. This being delivered in accordance with our revised
quotation of May 23 for delivery in 10/11 months, i.e., March/April
1970. We return herewith duly, completed your acknowledgment .of
order form."
They enclosed the acknowledgment form' duly filled in with the delivery
date March/April 1970 and signed by the Butler Machine Tool Co.
No doubt a contract was then concluded. But oh what terms? The
sellers rely, on their general conditions and on their last letter which said
 The Weekly Law Reports, April 13, 1979
404
Lord Denning M.R. Butler Machine Tool v. Ex-Ccll-O Corpn. (CA.) [1979]
" in accordance with our revised quotation of May 23 " (which had on the A
back the price variation clause). The buyers rely on the acknowledgment
signed by the sellers which accepted the buyer's order " on the terms and
conditions stated thereon " (which did not include a price variation clause).
If those documents are analysed in our traditional method, the result
would seem to me to be this: the quotation of May 23, 1969, was an offer
by the sellers to the buyers containing the terms and conditions on the back.
The order of May 27, 1969, purported to be an acceptance of that offer
in that it was for the same machine at the same price, but it contained such
additions as to cost of installation, date of delivery and so forth that it was
in law a rejection of the offer and constituted a counter-offer. That is
clear from Hyde v. Wrench (1840) 3 Beav. 334, As Megaw J. said in
Trollope & Colls Ltd. v. Atomic Power Constructions Ltd. [1963] 1
W.L.R. 333, 337: " . . . the counter-offer kills the original offer." The letter C
of the sellers of June 5, 1969, was an acceptance of that counter-offer, as is
shown by the acknowledgment which the sellers signed and returned to the
buyers. The reference to the quotation of May 23 referred only to the
price and identity of the machine.
To go on with the facts of the case. The important thing is that the sellers
did not keep the contractual date of delivery which was March/April 1970. Q
The machine was ready about September 1970 but by that time the buyers'
production schedule had to be re-arranged as they could not accept delivery
until November 1970. Meanwhile the sellers had invoked the price increase
clause. They sought to charge the buyers an increase due to the rise in
costs between May 27, 1969 (when the order was given), and April 1, 1970
(when the machine ought to have been delivered). It came to 2,892. The
buyers rejected the claim. The judge held that the sellers were entitled to ^
the sum of 2,892 under the price variation clause. He did not apply the
traditional method of analysis by way of offer and counter-offer. He said
that in the quotation of May 23, 1969, " one finds the price variation clause
appearing under a most emphatic heading stating that it is a term or con
dition that is to prevail." So he held that it did prevail.
I have much sympathy with the judge's approach to this case. In many of F
these cases our traditional analysis of offer, counter-offer, rejection,
acceptance and so forth is out of date. This was observed by Lord
Wilberforce in New Zealand Shipping Co. Ltd. v. A. M. Satterthwaite
& Co. Ltd. [1975] A.C. 154, 167. The better way is to look at all the
documents passing between the partiesand glean from them, or from the
conduct of the parties, whether they have reached agreement on all material r
pointseven though there may be differences between the forms and
conditions printed on the back of them. As Lord Cairns said in Brogden v.
Metropolitan Railway Co. (1877) 2 App.Cas. 666, 672:
". . . there may be a consensus between the parties far short of a com
plete mode of expressing it, and that consensus may be discovered
from letters or from other documents of an imperfect and incomplete
description;..." "
Applying this guide, it will be found that in most cases when there is a
" battle of forms," there is a contract as soon as the last of the forms is
sent and received without objection being taken to it. That is well observed
in Benjamin's Sale of Goods, 9th ed. (1974), p. 84. The difficulty is to decide
which form, or which part of which form, is a term or condition of the
contract. In some cases the battle is won by the man who fires the last shot.
 The Weekly Law Reports, April 13, 1979
405
1 W.L.R. Butler Machine Tool v. Ex-Cell-O Corpn. (C.A.) Lord Denning M.R.
A He is the man who puts forward the latest terms and conditions: and, if
they are not objected to by the other party, he may be taken to have agreed
to them. Such was British Road Services Ltd. v. Arthur V. Crutchley & Co.
Ltd. [1968] 1 Lloyd's Rep. 271, 281-282, per Lord Pearson; and the illustra
tion given by Professor Guest in Anson's Law of Contract, 24th ed., pp. 37,
38 when he says that "the terms of the contract consist of the terms
of the offer subject to the modifications contained in the acceptance.
In some cases the battle is won by the man who gets the blow in first.
If he offers to sell at a named price on the terms and conditions stated
on the back: and the buyer orders the goods purporting to accept the
offeron an order form with his own different terms and conditions on
the backthen if the difference is so material that it would affect the
price, the buyer ought not to be allowed to take advantage of the differ-
C ence unless he draws it specifically to the attention of the seller. There
are yet other cases where the battle depends on the shots fired on both sides.
There is a concluded contract but the forms vary. 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 irreconcilableso that they are mutually contradictory
then the conflicting terms may have to be scrapped and replaced by a
reasonable implication.
In the present case the judge thought that the sellers in their original
quotation got their blow in first: especially by the provision that " these
terms and conditions shall prevail over any terms and conditions in the
buyer's order." It was so emphatic that the price variation clause continued
through all the subsequent dealings and that the buyers must be taken to
E have agreed to it. I can understand that point of view. But I think that the
documents have to be considered as a whole. And, as a matter of construc
tion, I think the acknowledgment of June 5, 1969, is the decisive document.
It makes it clear that the contract was on the buyers' terms and not on the
sellers' terms: and the buyers' terms did not include a price variation clause.
I would therefore allow the appeal and enter judgment for the defend-
p ants.

LAWTON L.J. The modern commercial practice of making quotations

and placing orders with conditions attached, usually in small print, is indeed
likely, as in this case to produce a battle of forms. The problem is how
should that battle be conducted? The view taken by Thesiger J. was that the
battle should extend over a wide area and the court should do its best to
G
look into the minds of the parties and make certain assumptions. In my
judgment, the battle has to be conducted in accordance with set rules. It is
a battle more on classical 18th century lines when convention decided
who had the right to open fire first rather than in accordance with the
modern concept of attrition.
The rules relating to a battle of this kind have been known for the
past 130-odd years. They were set out by Lord Langdale M.R. in Hyde v.
Wrench, 3 Beav. 334, 337, to which Lord Denning M.R. has already
referred; and, if anyone should have thought they were obsolescent,
Megaw J. in Trollope & Colls Ltd. v. Atomic Power Constructions Ltd.
[1963] 1 W.L.R. 333, 337 called attention to the fact that those rules are
still in force.
When those rules are applied to this case, in my judgment, the answer
 The Weekly Law Reports, April 13, 1979
406
Lawlon LJ. Butler Machine Tool v. Ex-Cell-O Corpn. (C.A.) [1979]
is obvious. The sellers started by making an offer. That was in their \
quotation. The small print was headed by the following words:
" General. All orders are accepted only upon and subject.to the terms
set out in our quotation and the following conditions. These terms
and conditions shall prevail over any terms and conditions in the
buyer's order." .
That offer was not accepted. The buyers were only prepared to have one "
of these very expensive machines on their own terms. Their terms had very
material differences in them from the terms put forward by the sellers. They
could not be reconciled in any way. In the language of article 7 of the
Uniform Law on the Formation of Contracts for the International Sale
of Goods (see Uniform Laws on International Sales Act 1967, Schedule 2)
they did " materially alter the terms" set out in the offer made by the C
plaintiffs.
As I understand Hyde v. Wrench, 3 Beav. 334, and the cases which have
followed, the consequence of placing the order in that way, if I may adopt
Megaw J.'s words [1963] 1 W.L.R. 333, 337, was " to kill the original offer."
It follows that the court has to look at what happened after the buyers made
their counter-offer. By letter dated June 4, 1969, the plaintiffs acknowledged _
receipt of the counter-offer, and they went on in this way:
"Details pf. this order have been passed to our Halifax works for
attention and a formal acknowledgment of order will follow in due
course."
That is clearly a reference to the printed tear-off slip which was at the
bottom of the buyers' counter-offer. By letter dated June 5, 1969, the B
sales office manager at the plaintiffs' Halifax factory completed that tear-off
slip and sent it back to the buyers.
It is true, as Mr. Scott has reminded us, that the return of that printed
slip was accompanied by a letter which had this sentence in it: " This is
being entered in accordance with our revised quotation of May 23 for
delivery in 10/11 months." I agree with Lord Denning M.R. that, in p
business sense, that refers to the quotation as to the price and the identity
of the machine, and it does not bring into the contract the. small print con
ditions on the back of the quotation. Those small print conditions had
disappeared from the story. That was when the contract was made. At that
date it was afixedprice contract without a price escalation clause.
As I pointed out in the course of argument to Mr. Scott, if the letter
of June 5 which accompanied the form acknowledging the terms which the **
buyers had specified had amounted to a counter-offer, then in my judgment
the parties never were ad idem. It cannot be said that the buyers accepted
the counter-offer by reason of the fact that ultimately they took physical
delivery of the machine. By the time they took physical delivery of the
machine, they had made, it clear, by correspondence that they were not
accepting that there was any price escalation clause in any contract which JJ
they had made with the plaintiffs.
I agree with Lord Denning M.R. that this appeal should be allowed.

BRIDGE L.J. Schedule 2 to the Uniform Laws on International Sales

Act 1967 is headed " The Uniform Law on the Formation of Contracts for
the International Sale of Goods." To the limited extent that that Schedule
is already in force in the law of this country, it would riot in any event be
 The Weekly Law Reports, April 13, 1979
407
1 W.L.R. Butler Machine Tool v. Ex-Cell-O Corpn. (C.A.) Bridge L J.
A applicable to the contract which is the subject of this appeal because that
was not a contract of international sale of goods as denned in that statute.
We have heard, nevertheless, an interesting discussion on the question
of the extent to which the terms of article 7 of that Schedule are mirrored
in the common law of England today. No difficulty arises about paragraph
1 of the article, which provides: " An acceptance containing additions,
_ limitations or other modifications shall be a rejection of the offer and shall
constitute a counter-offer." But paragraph 2 of the article is in these terms:
" However, a reply to an offer which purports to be an acceptance but
which contains additional or different terms which do not materially
alter the terms of the offer shall constitute an acceptance unless the
offeror, promptly objects to the discrepancy; if he does not so object, the
terms of the contract shall be the terms of the offer with the modifica-
^ tions contained in the acceptance."
For my part, I consider it both unnecessary and undesirable to express
any opinion on the question whether there is any difference between the
principle expressed in that paragraph 2 and the principle which would
prevail in the common law of England today without reference to that
paragraph, but it was presumably a principle analogous to that expressed
in paragraph 2 of article 7 which the editor of Anson's Law of Contract,
24th ed., Professor Guest, had in mind in the passage from that work which
was quoted in the judgment of Lord Denning M.R. On any view, that
passage goes a good deal further than the principle expressed in article 7
of the Act of 1967, and I entirely agree with Lord Denning M.R. that it
goes too far.
E But when one turns from those interesting and abstruse areas of the
law; to the plain facts of this case, this case is nothing like the kind of
case with which either the makers of the convention which embodied article
7 of Schedule 2 or the editor of Anson, 24th ed., had in mind in the passages
referred to, because this is a case which on its facts is plainly governed by
what I may call the classical doctrine that a counter-offer amounts to a
p rejection of an offer and puts an end to the effect of the offer.
The first offer between the parties here was the plaintiff sellers' quotation
dated May 23, 1969. The conditions of sale in the small print on the back
of that document, as well as embodying the price variation clause, to
which reference has' been made in the judgments already delivered,
embodied a number of other important conditions. There was a condition
providing that orders should in no circumstances be cancelled without the
^ written consent of the sellers and should only be cancelled on terms which
indemnified the sellers against loss. There was a condition that the sellers
should not be liable for any loss or damage from delay however caused.
There was a condition purporting to limit the sellers' liability for damage
due to defective workmanship or materials in the goods sold. And there
was a condition providing that the buyers should be responsible for the
H cost of delivery.
When one turns from that document to the buyers' order of May 27,
1969, it is perfectly clear not only that that order was a counter-offer but that
it did not purport in any way to be an acceptance of the terms of the sellers'
offer dated May 23. In addition, when one compares the terms and condi
tions of the buyers' offer, it is clear that they are in fact contrary in a
number of vitally important respects to the conditions of sale in the
sellers' offer. Amongst the buyers' proposed conditions are conditions that
 The Weekly Law Reports, April 13, 1979
408
Bridge LJ. Butler Machine Tool v. Ex-Cell-O Corpn. (C.A.) [1979]
the price of the goods shall include the. cost of delivery to the buyers' A
premises; that the buyers shall be entitled to cancel for any delay in
delivery; and a condition giving the buyers a right to reject if on inspection
the goods are found to be faulty in any respect.
The position then was, when the sellers received the buyers' offer of
May 27, that that was an offer open to them to accept or reject. They
replied in two letters dated June 4 and 5 respectively. The letter of June 4
was an informal acknowledgment of the order, and the letter of June 5
enclosed the formal acknowledgment, as Lord Denning M.R. and Lawton
L.J. have said, embodied in the printed tear-off slip taken from the order
itself and including the perfectly clear and unambiguous sentence " We
accept your order on the terms and conditions stated thereon." On the
face of it, at that moment of time, there was a complete contract in existence,
and the parties were ad idem as to the terms of the contract embodied in C
the buyers' order.
Mr. Scott has struggled manfully to say that the contract concluded on
those terms and conditions was in some way overruled or varied by the
references in the two letters dated June 4 and 5 to the quotation of May
23, 1969. The first refers to the machinery being as quoted on May 23. The
second letter says that the order has been entered in accordance with the ~
quotation of May 23.1 agree with Lord Denning M.R. and Lawton L.J. that
that language has no other effect than to identify the machinery and to
refer to the prices quoted on May 23. But on any view, at its highest, the
language is equivocal and wholly ineffective to override the plain and
unequivocal terms of the printed acknowledgment of order which was
enclosed with the letter of June 5. Even if that were not so and if Mr. Scott
could show that the sellers' acknowledgment of the order was itself a further E
counter-offer, I suspect that he would be in considerable difficulties in
showing that any later circumstance amounted to an acceptance of that
counter-offer in the terms of the original quotation of May 23 by the buyers.
But I do not consider that question further because I am content to rest
upon the view that there is nothing in the letter of June 5 which overrides the
plain effect of the acceptance of the order on the terms and conditions p
stated thereon.
I too would allow the appeal and enter judgment for the defendants.

Appeal allowed with costs in Court

of Appeal and below.
Leave to appeal refused.

Solicitors: Tringhams for Harvey, Ingram, Leicester; Wood, Nash &

Winters for Wilkinson, Woodward & Ludlam, Halifax.

A. H. B.