National Controls, Inc. v. Commodore Business Machines, Inc.

163 Cal.App.3d 688 (1985)

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Nature of the Case

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Facts

NCI (P) made scales to be used in conjunction with case register checkout stands. Commodore (D) had discussions with P to become an O.E.M customer of P's for the use of their scales. D purchased one unit by phone. D bought four more units by phone a month later in December 1980. P did not get a P.O. from D, but D merely gave P a P.O. number over the phone. No purchase order paperwork had been exchanged. In March 1981, 30 more scales were ordered by D over the phone by the same procedures. Another order was placed for 900 scales with extended delivery dates of 50 in May 150 in June 300 in July, and 400 in August. A sales order was prepared by P and a copy of that sales order was mailed to D. D also mailed its purchase order to P. Paragraph 19 of the reverse side of that order contained a provision limiting the damages for which D would be responsible in the event of a breach; in particular, the provision disclaimed liability for any incidental or consequential damages. During their phone conversations, there was no discussion of any terms and conditions on that purchase order other than price, quantity, and delivery schedule. Delivery of the first 200 units were made. When the 300 units were to ship in June and another 400 almost completed, D only accepted the first 50 scales and did not accept or pay for the remaining 850 units. Those units were then resold to National Semiconductor. P sued D. The trial court found that the terms of the contract were established during the telephone discussions prior to March 31, 1981, and in the November 1980 letter from P to D enclosing the pricing schedule as well as the terms of P's sales order. The trial court concluded that the terms of the parties' contract were those established during their telephone discussions prior to and on March 31, 1981, and in the November 1980 letter from P to D enclosing a price schedule, as well as 'the terms' of P's prior sales orders. It then concluded that the provision on limitation of damages in D's purchase order was a proposal for an additional term which did not become part of the contract because it was a material alteration thereof. The court also found that P was a 'lost volume seller' who was entitled to recover the loss of profit it would have made on the sale of the 850 units to D, notwithstanding its subsequent resale of those units to another customer. D appealed.