Idaho Power Co. v. Westinghouse Electric Corp.

Brief Fact Summary.

Idaho Power Company (Idaho Power) sent an inquiry to Westinghouse Electric Corporation (Westinghouse) requesting a price quote for a three-phase voltage regulator, and Westinghouse responding with a price quote that provided it was subject to the terms on the back of the form.  Idaho Power ordered the voltage regulator on its own form, that had different terms, and the question was whose terms as to liability applied.

Synopsis of Rule of Law.

In a contract between merchants under the Uniform Commercial Code (UCC) 2-207, additional terms in an acceptance 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 is given within a reasonable time after notice of them is received.  

Facts.

Westinghouse’s terms provided it would not be liable for special, indirect or consequential damages; that its liability would not exceed the price of the product; and that its terms constituted the whole agreement.

Idaho Power’s purchase order did not limit Westinghouse’s liability, and said that an acceptance thereof would be an agreement to its terms and supercede all prior agreements.  

After the regulator was received and installed, it failed and caused a fire that damaged other machinery.  Idaho Power sought $21,241.52 on theories of negligence, breach of implied and express warranty, and strict liability in tort.  The lower court entered summary judgment of dismissal based on the liability limitations in Westinghouse’s form. 

Issue.

Did Westinghouse’s disclaimer apply?

Held.

Affirmed.  Under the circumstances, the disclaimer was an effective defense to Idaho Power’s strict liability action.

·         Idaho Power’s purchase order was a seasonable expression of acceptance, even though it contained additional terms.  In commercial transactions, such an order, especially when followed by performance, is understood to close the deal between the parties.

Idaho Power’s form did not contest Westinghouse’s disclaimer; it merely purported to supercede all prior agreements.  At best, the term conflicted with Westinghouse’s integration clause but did not nullify the disclaimer, which was a part of the contract. 

Dissent.

None

Concurrence.

None

Discussion.

Idaho Power’s proviso that acceptance of its order would constitute an agreement to its conditions and supercede all previous agreements was an attempt to alter the terms of the offer.  However, the language did not reveal that Idaho Power was unwilling to proceed with the transaction unless Westinghouse agreed to the new terms.  Therefore, Westinghouse’s acceptance was not expressly made conditional on assent to Idaho Power’s terms within UCC 2-207.  Westinghouse’s terms and disclaimer were controlling.