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Richardson v. Union Carbide Industrial Gases

February 11, 2002

JEFFREY RICHARDSON, PLAINTIFF
v.
UNION CARBIDE INDUSTRIAL GASES, INC., PRAIX AIR CO., ALLIANZ INSURANCE COMPANY, AMERICAN RISK MANAGEMENT, INTEGRATED SYSTEMS ENGINEERING SYSTEMS ENGINEERING COMPANY, E. ERNEST JOHNSON, INTERLAKE CORP., BARBER-COLEMAN COMPANY, ALLEN-BRADLEY, INC., FROMME ELECTRIC SUPPLY CO., ACRISON, INC., MILLTRONICS, INC., NEUTRONICS, INC., DREXELBROOK ENGINEERING CO., DONALDSON, INC., SELAS FURNACE COMPANY, DEB MAINTENANCE, INC., BURLINGTON EQUIPMENT CO., MAGDA INDUSTRIES, INC., THYSSEN SPECIALTY STEEL INC., RAPAT CO., AND JENKINS ELECTRIC, INC., DEFENDANTS, AND RAGE ENGINEERING, INC. DEFENDANT-APPELLANT
v.
HOEGANAES CORPORATION, DEFENDANT-RESPONDENT



On appeal from Superior Court of New Jersey, Law Division, Burlington County, Docket No. L-3543- 93.

Before Judges Havey, Braithwaite and Coburn.

The opinion of the court was delivered by: Braithwaite, J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued January 22, 2002

In this appeal, we are required to address whether the "knock- out" rule applies in New Jersey when there are conflicting terms in a contract governed by the Uniform Commercial Code ("UCC"), codified at N.J.S.A. 12A:1-101 to 11-108. The effect of applying the "knock- out" rule is that the conflicting terms do not become part of the parties' contract and the contract "consists of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of this act." N.J.S.A. 12A:2-207(3). We conclude that the "knock-out" rule applies in New Jersey and affirm the summary judgment granted to defendant Hoeganaes Corporation ("Hoeganaes"), dismissing defendant Rage Engineering Inc.'s ("Rage") cross-claim for indemnification.

Because this appeal arises from the grant of summary judgment, we must view the facts, and all favorable inferences from those facts, in the light most favorable to Rage. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 536 (1995); Strawn v. Canuso, 140 N.J. 43, 48 (1995). These are the facts.

Prior to 1988, Hoeganaes operated furnace 2S, which was used for annealing iron powders. In 1988, Hoeganaes undertook the conversion of furnace 2S to a distalloy furnace. Part of the conversion process required the purchase of a powder transporter system or a "dense phase system" to transport iron powder to the input end of the furnace. Hoeganaes purchased the system from Rage after inquiring from two other possible sellers.

On or about September 26, 1988, Rage proposal number 3313 for a transporter system for iron powder and a transfer system for steel powder was submitted to Edward Pirkey, senior project engineer for Hoeganaes. Hoeganaes issued purchase order No. 21584 to Rage for that equipment. The transporter system for iron powder, referred to in the Rage proposal as System I, was installed on furnace 2S.

Subsequently, Rage submitted two more proposals to Hoeganaes. Number 3353 was for target boxes and Number 3375 was for control logic panels. Hoeganaes issued purchase order Number 23952 in response to these two proposals. By May 1989, the conversion of furnace 2S was completed.

The proposals issued by Rage were typed in a letter format addressing the items desired by Hoeganaes. At the base of each page of each proposal, the following language in capital letters was typed: "ANY PURCHASE ORDER ISSUED AS A RESULT OF THIS QUOTE IS MADE EXPRESSLY SUBJECT TO THE TERMS AND CONDITIONS ATTACHED HERETO IN LIEU OF ANY CONFLICTING TERMS PROPOSED BY PURCHASER." The terms and conditions attached to Rage's proposals were standard terms that were sent with every proposal and appeared in standard boilerplate format. The terms and conditions were not discussed during Rage's meetings with Hoeganaes.

At the top of the terms and conditions was a Limitation of Acceptance which stated:

LIMITATION OF ACCEPTANCE. This sale (including all services) is limited to and expressly made conditional on Purchaser's assent to these Terms and Conditions as well as all other provisions contained in any other document to which these Terms and Conditions are attached. Purchaser agrees: (a) These Terms and Conditions . . . shall be deemed to supercede and take precedence over all prior writings, representations or agreements regarding this sale; (b) These Terms and Conditions . . . shall represent our complete agreement; (c) Any inconsistent, conflicting or additional terms or conditions proposed by Purchaser in any order, acceptance or other document or form shall be void and without effect unless Seller shall specifically and expressly accept same in writing; (d) No modification of these Terms and Conditions . . . will be affected by Seller's shipment of goods/equipment or the provision of services following receipt of Purchaser's order, acceptance or other document or form containing terms which are inconsistent, conflicting or in addition to these Terms and Conditions . . .; and (e) Any acceptance of goods/equipment or services, or payment constitutes an acceptance by Purchaser of these Terms and Conditions . . .

The Rage terms and conditions also had an indemnity clause, which stated:

INDEMNITY. Purchaser shall indemnify and hold Seller harmless against and in respect of any loss, claim or damage (including costs of suit and attorneys' fees) or other expense incident to or in connection with: the goods/equipment; the furnishing of design, installation (including site preparation) or other services; processing or use by any person of any goods/equipment or system (including personal injury to the employees of Seller and Purchaser); or Purchaser's violation of any provision of these Terms and Conditions or the provisions of any document to which these Terms and Conditions are attached unless such loss, claim or damage is due solely and directly to the negligence or willful misconduct of Seller.

At the bottom of the purchase orders issued by Hoeganaes the following language in bold face type appeared: "THIS ORDER IS ALSO SUBJECT TO THE TERMS AND CONDITIONS ON THE REVERSE SIDE OF THIS PAGE[.]" The reverse side of the purchase orders included the following section at the top of the boilerplate terms and conditions section:

1. Compliance with Terms and Conditions of Order - The terms and conditions set forth below, along with the provisions set forth on the front page hereof, constitute the entire contract of purchase and sale between Buyer and Seller. Any provisions in the Seller's acceptance, acknowledgment or other response to this Order which are different from or in addition to any of the terms and conditions and other provisions of this Order are hereby objected to by Buyer and such different or additional provisions shall not become a part of Buyer's contract of purchase and sale.

Furthermore, the reverse side also contained the following indemnity clause and a clause stating that the purchase order ...


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