New Mexico Merchant's Objection to Additional Term

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Multi-State
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US-02465BG
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Description

Unless it is expressly specified that an offer to buy or sell goods must be accepted just as made, the offeree may accept an offer and at the same time propose an additional term. This is contrary to general contract law. Under general contract law, the proposed additional term would be considered a counteroffer and the original offer would be rejected. Under Article 2 of the UCC, the new term does not reject the original offer. A contract arises on the terms of the original offer, and the new term is a counteroffer. The new term does not become binding until accepted by the original offeror. If, however, the offer states that it must be accepted exactly as made, the ordinary contract law rules apply.

In a transaction between merchants, the additional term becomes part of the contract if that term does not materially alter the offer and no objection is made to it. However, if such an additional term from the seller operates solely to the seller’s advantage, it is a material term and must be accepted by the buyer to be effective. A buyer may expressly or by conduct agree to a term added by the seller to the acceptance of the buyer‘s offer. The buyer may agree orally or in writing to the additional term. There is an acceptance by conduct if the buyer accepts the goods with knowledge that the term has been added by the seller.

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FAQ

Knockout Rule: Offeree's and Offeror's conflicting terms ?knock out? each other, which means neither party's preferred terms are included in the contract. Fallout Rule: Offeree's conflicting terms ?fall out,? which means the Offeror's preferred terms are included in the contract.

Scenario, Section 2-207(3) knocks out the conflicting warranty and damages provisions and reverts the forms back to the UCC default position. This results in a contract which includes the full range of implied warranties, damages for breach, and consequential damages in appropriate cases.

At common law, the mirror image rule requires an acceptance to be exactly like the offer. The rule is reversed under the Uniform Commercial Code, however. Under UCC § 2-207, an acceptance is still an acceptance even though it states different or additional terms from the offer.

There is a void in New Mexico law between tort and contract where consumers cannot recover for economic loss due to defective products or services. Tort law fails to protect consumers because the economic loss rule precludes tort claims for economic loss when claims are based on breach of a contractual duty.

A rule courts apply in cases of conflicting contract terms, under which, if an expression of acceptance contains terms that are additional to or different from those in the offer, the conflicting terms in both the offer and acceptance are knocked out of the contract and replaced by UCC gap-filler provisions.

(1) A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or ...

UCC § 2-207(2) (a)-(c). The "knock-out rule" is applied by courts to resolve a "battle of the forms" when the forms contain conflicting terms. In this situation, a contract is still formed but the rule operates to reject both parties' terms if there is a disagreement between the forms exchanged.

The goal of Section 2-207 is to allow the parties to enforce their agreement, whatever it may be, despite discrepancies that may exist between an oral agreement and a written confirmation, and despite discrepancies between a written offer and a written acceptance, if the acceptance can be effectuated without requiring ...

Statute of frauds: Main exceptions ?Merchant's Exception? (UCC 2-201 (2)): If you and your Buyer are both merchants*, and you sent him something in writing memorializing the oral agreement (some courts consider detailed invoices sufficient), and he did not object, the oral contract is enforceable.

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New Mexico Merchant's Objection to Additional Term