Butler Machine Tool Co Ltd v Ex-Cell-O Corp (England) Ltd [1979] 1 WLR 401

Butler offered to sell a machine tool for £75,535. Its quotation incorporated standard terms, including a price-variation clause and language stating that those terms would prevail over any terms in the buyer's order. Ex-Cell-O responded with an order for the same machine and price, but on its own standard terms, which contained no price-variation clause. The order included a tear-off acknowledgement for Butler to sign and return. Butler returned the signed acknowledgement with a covering letter stating that the order was being entered in accordance with its revised quotation. The machine was delivered. Butler later claimed an additional £2,892 under its price-variation clause, reflecting increased manufacturing costs. Ex-Cell-O denied that the clause formed part of the contract.

Which set of standard terms governed the contract, and in particular had Butler's price-variation clause survived the exchange of quotation, order, acknowledgement and covering letter?

The Court of Appeal held that the contract was made on Ex-Cell-O's terms, so Butler could not recover the increased price. The buyer's order was a counter-offer because it proposed materially different terms from Butler's quotation. Butler accepted that counter-offer by signing and returning the acknowledgement slip. The accompanying reference to the revised quotation identified the machine and price but did not reinstate the seller's printed conditions or make a further counter-offer. Lawton and Bridge LJJ reached the result through conventional offer, counter-offer and acceptance analysis. Lord Denning MR also suggested that, in some cases, the documents and conduct should be considered as a whole to identify the parties' agreement. On either approach, the price-variation clause was excluded.

Where parties exchange conflicting standard terms, the court ordinarily identifies the offer, any counter-offer and the final acceptance objectively. A counter-offer rejects the earlier offer, and acceptance of the counter-offer generally produces a contract on the counter-offer's terms. The outcome depends on the communications and conduct as a whole, not on labels printed by either party.

The decision is the classic English authority on the battle of forms and is often described as an example of the last-shot approach. It must not be reduced to a rule that the last document always wins. The task remains to determine objectively whether and when agreement occurred. In Tekdata Interconnections Ltd v Amphenol Ltd, the Court of Appeal confirmed that orthodox offer-and-acceptance analysis is generally the starting point, although established dealings or industry context may justify a different conclusion.