Flender Corp. v. Tippins International, Inc.

830 A.2d 1279 (Pa. Super. Ct. 2003)

Pennsylvania Superior Court · 2003

Rule

Under UCC § 2-207, when an offer and acceptance contain conflicting terms on the same subject, both conflicting terms drop out and default rules supply the gap. Forum-selection clauses that disagree are knocked out; jurisdiction is governed by background law.

Learning outcomes

By the end of working with this case, you can:

Facts

Flender, a German manufacturer of gear-drive assemblies, sold equipment to Tippins. The transaction proceeded through the familiar exchange of pre-printed forms. Flender’s quotation called for arbitration in Vienna; Tippins’s purchase order called for the laws and courts of Allegheny County, Pennsylvania, with no arbitration. When a dispute arose, Tippins sued in Pennsylvania state court, and Flender moved to compel Vienna arbitration.

Holding

The Pennsylvania Superior Court applied UCC § 2-207’s “knock-out” rule. The two forum-selection terms conflicted; under the knock-out approach, neither prevailed, and default jurisdictional rules supplied the gap. The Pennsylvania courts had jurisdiction, and the motion to compel arbitration was denied.

Reasoning

Section 2-207 was drafted to displace the common-law mirror-image rule’s tendency to treat every form mismatch as a counter-offer. Once a contract has been formed by the parties’ conduct or by acceptance with additional or different terms, the question becomes how to reconcile the forms. Pennsylvania, with most jurisdictions, adopts the knock-out rule for conflicting terms: a term in the offer and a contradictory term in the acceptance cancel each other out, leaving the gap to be filled by UCC defaults. That approach refuses to reward the last sender of a form and avoids the trap of treating substantive contract formation as a contest of stationery.

Why it matters

Flender anchors the modern teaching of § 2-207 because it adopts the knock-out rule cleanly and applies it to a high-stakes term, forum selection. Read with State DOT, the chapter contrasts the common-law mirror-image rule and the UCC’s softer treatment of form battles. Together the two cases let students see why Article 2 changed the rules for merchant transactions and what the consequences are for routine commerce conducted by exchanged forms.

The trap

Students apply the 'last shot rule' reflexively, treating whichever form fired last before performance as the controlling document. Article 2 displaces that result. A related trap: students assume conflicting terms cancel only the offeror's, leaving the offeree's. The knockout rule cancels both.

The operational intuition the case is designed to break. Naming the trap is what the Socratic exchange is for.

Socratic ladder

The professor's scaffold for the in-class exchange. Each rung is a stage; the questions are scripted prompts, not the punchline.

Surfacing · 60 sec

Q. Your company sends a purchase order for $200,000 of industrial equipment. Your boilerplate says disputes go to your home state's courts. The supplier acknowledges with its own boilerplate sending disputes to arbitration in Vienna. Both sides perform. Then a dispute arises. Where does it go?

Look for: The instinct is to pick a winner. Some students argue the supplier's form controls (last shot); others say the buyer wins because the buyer initiated. Few reach for the possibility that neither clause applies.

Holding · 60 sec

Q. What did the Pennsylvania Superior Court do with the two conflicting forum-selection clauses?

Look for: Knocked both clauses out. The court held that under UCC § 2-207, conflicting terms in the offer and the acceptance cancel each other; default jurisdictional rules supply the gap. The motion to compel arbitration in Vienna was denied.

Reasoning · 120 sec

Q. At common law, the mirror-image rule would say the seller's acknowledgment was a counter-offer that the buyer accepted by performance, so the seller's terms govern. Article 2 rejects that. Why? And once it does, why don't the seller's terms govern Flender either?

Trap: Students apply the common-law last-shot rule reflexively. Or they assume the knockout cancels only the offeror's clause and the offeree's survives. Neither is correct under UCC § 2-207.

Board: UCC § 2-207(3): contract by conduct; terms = agreed terms + UCC gap-fillers; conflicting terms knocked out.

Push back: Both writings said something about forum. Both said something different. If we let one survive and not the other, on what principle do we choose? Why does the UCC refuse to choose?

Push to: UCC § 2-207(3) and the knockout rule. When the writings disagree on a term but the parties perform, the contract contains the terms on which the writings agree plus UCC gap-fillers. Conflicting terms drop out. The rule denies the last-shot advantage that the common-law mirror-image rule created.

Hypothetical · 90 sec

Vary. Vary one fact. The seller's acknowledgment says: 'Acceptance of this order is expressly conditional upon buyer's assent to the terms herein, including the Vienna arbitration clause.' Buyer takes delivery without signing. Same result?

Point: The variation activates the proviso in § 2-207(1). The acknowledgment is no longer an acceptance because it is expressly conditional. The writings do not form a contract. Performance forms a contract under § 2-207(3), and the knockout still runs. The point: even the express-conditional escape route ends back at § 2-207(3) once the parties perform.

Integration · 75 sec

Q. You have issued a purchase order; your supplier returned an invoice with different boilerplate; the goods shipped. Have you been Flender? What term in your boilerplate would you most want to survive, and how would you draft to protect it?

Land: Flender anchors the knockout rule on the UCC § 2-207 decision tree. Path-dependence probe: § 2-207 is a takanah. The common law underprovided for routine form-on-form commerce. The drafters intervened. Is the knockout result optimal, or would a 'last shot' or 'first shot' rule produce better incentives for parties to negotiate? Compare the CISG approach.

Flender Corp. v. Tippins Int'l, Inc., 830 A.2d 1279 (Pa. Super. Ct. 2003).