PPG Industries Inc. sent RFPs to several possible suppliers of gaskets to be used in the installation of PPG windows. One of the suppliers, Mantaline Inc., sent a price quotation to PPG. The price quotation stated, "Any order placed in response to this quotation shall be deemed an express acceptance of each and every term and condition of sale contained herein on the reverse side hereof."

The reverse side of the Mantaline quotation stated that the buyer (PPG) would indemnify Mantaline against any loss. PPG responded to this quotation with its purchase order, which stated, "This purchase order is effective and expressly conditional on supplier's assent to all terms and conditions in this purchase order that are additional to or different from those stated in supplier's quotation or other offering documents."

After receiving PPG's purchase order, Mantaline shipped the gaskets, which PPG then used in installing windows in a major commercial building. The gaskets were defective causing damage to the building. The building owner sued PPG, which sought to bring Mantaline into the lawsuit to make Mantaline responsible for the damages. Mantaline claimed that the statement in its quotation that PPG would indemnify (save harmless) Mantaline from any such loss was part of the contract. In effect, Mantaline argued that its quotation was an offer and PPG's purchase order was an acceptance of the offer even though the PPG purchase order stated that it was expressly conditioned on the supplier's assent to all of PPG's terms and conditions. This raises the important question, is a supplier's quotation an offer?

The best answer is, "It depends." It depends upon the particular language used in the quotation. Calling a document a "quotation" means nothing. The critical issue is whether the quotation or document by any other name constitutes an offer. An offer is a promise or commitment that something will or will not occur in the future, so made as to provide the recipient with an understanding that it has the power to form a contract. A mere quotation of prices is not an offer because it is not promising to sell to the other party. An offer creates a "power of acceptance" in the other party (the offeree) who can form a contract by exercising that power. A mere quotation of prices has no such legal effect. Advertisements, trade circulars and the like are typically not offers. They are invitations to the other party to make an offer at the price suggested in the advertisement or quote. If, however, a quotation contains promissory language, committing the seller to deliver goods or services to the other party, it will be an offer. Again, the caption of the document, "quotation," or other heading, alone, does not tell us whether it is an offer or an invitation to make an offer.

In this case, the court found that the Mantaline quotation was not an offer. It was an invitation to PPG to make an offer at the prices suggested in the quote. PPG then proceeded to make the offer by sending its purchase order. Mantaline did not respond with any document. It simply shipped the gaskets. One of the ways a party receiving an offer (an offeree) may accept an offer is by shipping the goods. By shipping the gaskets, the court said, Mantaline accepted PPG's offer and formed a contract on PPG's terms. The contract did not contain Mantaline's indemnity clause that would have save it from the damages that PPG demanded. PPG prevailed in this lawsuit.

The interesting question is, suppose Mantaline's quotation including its indemnity clause had been an offer, that is, suppose it had contained language that promised to deliver the gaskets at a certain price, thereby providing PPG with an understanding that its acceptance of the offer would form a contract. Would such a change in the quotation language have changed the result in this case? The answer is, no, and the reasons are important. Let's consider PPG's purchase order as either an offer or an acceptance.

The PPG purchase order language quoted earlier is critically important. If it is construed as an offer (as it was in this case because Mantaline's quote was not an offer), the purchase order expressly limits acceptance to the terms of the purchase order (offer). Instead of shipping the gaskets, even if Mantaline had sent an acknowledgment which appeared to be an acceptance with additional terms such as the indemnity clause, a contract would have been formed without the indemnity clause because such an additional term would be excised by the PPG purchase order's express limitation to its own terms. Suppose, however, that Mantaline's quotation was an offer to which PPG responded with its purchase order. Here, PPG's purchase order would not be an acceptance because it was "expressly conditional on supplier's assent to all terms and conditions in this purchase order that are additional to or different from those stated in supplier's quotation or other offering documents." This language makes it clear that PPG will not contract on any terms other than its own purchase order terms. It would not, therefore, be an acceptance of Mantaline's quotation if that quotation were an offer. Instead, the PPG purchase order would be a counter offer. While no contract would be formed, Mantaline's shipment of the gaskets and PPG's acceptance of them would create a contract by conduct (shipping and accepting). While the quotation (offer) and purchase order (counter offer) would not have formed the contract, courts would extract from those documents the terms that match and treat such terms as the terms of the contract by conduct. Nonmatching terms, however, would not be included. The Mantaline indemnity clause would be a nonmatching term that would not become part of the contract. Because of the language PPG chose to include in its purchase order, PPG would again prevail in the "battle of the forms."