For more than a decade, a number of attempts have been made to revise the law that governs contracts for the sale of goods. Original Article 2 of the Uniform Commercial Code has governed these transactions for almost a half-century. The National Conference of Commissioners on Uniform State Laws (NCCUSL) and the American Law Institute (ALI) are the partners who must be satisfied with any revision. After many efforts, NCCUSL finally approved amendments to Article 2 in August of 2002. The ALI will now consider these amendments, most of which are relatively modest because the original Article 2 has proven to be effective since its wide enactment throughout the country. If the ALI approves, the amendments will then be presented to state legislatures for enactment. We could, therefore, have an amended law governing all of our domestic contracts for the sale of goods in the foreseeable future.

The most controversial section of Article 2 over the last fifty years is the section dealing with the "battle of the forms." Where a buyer sends a purchase order and the seller sends an acknowledgment that matches the purchase order on all of the terms that the parties consciously consider such as price, quantity and subject matter but contains some printed clauses (boilerplate) containing different or additional terms, the law before Article 2 called the acknowledgment a counter offer. The different or additional terms would include disclaimers of implied warranties, exclusion of buyer's remedies and other terms favoring the supplier. The supplier would still ship the goods and the buyer would accept them. If trouble developed and the buyer sued for breach of warranty claiming certain damages, the seller would argue that its boilerplate terms controlled because its shipment was a counter offer accepted by the buyer when the buyer accepted the goods. The seller's terms won because it fired the "last shot" in the battle of the forms.

Article 2, Section 2-207, changed all of that by recognizing such an acknowledgment was an acceptance of the buyer's offer, forming a contract, notwithstanding the seller's additional or different terms in the boilerplate of its acknowledgment. The basic idea was to recognize a contract since reasonable buyers do not read or understand the boilerplate and assume they have a closed deal. The additional terms in the seller's form became part of the contract only if they were "immaterial" terms that did not change the basic deal between the parties. This change was desirable because it made the law reflect commercial realities. Unfortunately, the interpretation of 2-207 was filled with problems that made its application confusing.

While the opening section of 2-207 stated that a contract could be formed even if the seller's boilerplate contained "different" or "additional" terms, another critical section only dealt with "additional" terms. This led to considerable confusion over whether a given term was "additional" or "different" and its legal effect depending upon what it was called. Other difficulties centered on whether an additional term was "material" or "immaterial." There were problems over language in 2-207 allowing a party to make a counter offer. Courts were also concerned that the party who was said to make an offer was heavily favored under 2-207 even though buyers and sellers of goods pay little attention to the technical question of which party made the offer (the offeror) and which party accepted the offer (the offeree).

The proposed amendment to 2-207 attempts to deal with all of these problems. One of the necessary changes in the amendments is to change the term "writing" to "record." The law now recognizes electronic records and the term "record" is broad enough to include the traditional "writing" as well as electronic forms of communication. Once a court recognizes that a contract has been formed even though there are different or additional terms in one of the records of the parties to that contract, the amended 2-207 defines the terms of the deal. It no longer matters whether the term is different or additional, or whether it is material or immaterial. If a term does not appear in both records (such as a purchase order and acknowledgment) or if it is not otherwise agreed to, it will not end up as a term in the contract. The terms of the contract will be limited to terms that appear in the records of both parties, terms that are otherwise agreed to by the parties, and terms implied under the Uniform Commercial Code such as implied warranties and various remedies for breach of contract. Terms created by trade usage or the parties' prior course of dealing will be part of the contract unless the parties have agreed not to be bound by such terms.

If one or both records of the parties state that the party does not intend to be bound by any terms except the terms of its own record, no contract is created through the exchange of such forms. If, however, the parties then proceed to act is if they have a contract anyway by the seller shipping the goods and the buyer accepting the goods, there is a contract by conduct-not by the exchanged forms. The terms of that contract by conduct will, again, be the matching terms that appear in the records of both parties, terms to which they may have otherwise agreed, and implied terms supplied by the Uniform Commercial Code.

The amended 2-207 does not care which party is legally determined to be the offeror or offeree. It also applies to a situation involving only one record where the buyer and seller have made the basic deal by telephone, electronically or in person, followed by one of the parties sending a confirmation containing additional or different terms. Unless the other party has agreed to these terms, they will not become part of the contract.

The amended 2-207 is an effort to provide a more simple and effective Section 2-207 to assure that a buyer or seller is not stuck with additional or different boilerplate terms that a reasonable party would not have considered to be part of the deal. After many failed efforts, this one appears to have a good chance of becoming the new law of the land in domestic contracts for the sale of goods. In contracts for the sale of goods between a company with its principal place of business in the U. S. and a company whose principal place of business is in any one of sixty other countries including Canada and Mexico, the governing law is the United Nations Convention on Contracts for the International Sale of Goods, often known as the "Vienna Convention" or simply as CISG.