Case - Butler Machine Tool Co Ltd v Ex-Cell-O Corp (England) Ltd

Facts-

            The Butler Machine Tool Company quoted a price for a machine with specific terms and conditions for purchase outlined on the back.  These terms included a price variation clause which allowed the seller to increase the price if there was an increase in the manufacturing costs.

The purchaser sent back an order form outlining their own terms and conditions, which did not include a price variation clause.  Attached to this order form was a tear off slip to be signed by the seller acknowledging their acceptance of the buyer’s terms.

The seller’s returned the signed slip but when the machine was delivered in November 1970 they claimed an additional £2,982 under the price variation clause.  The buyer disputed this arguing there was no price variation clause in the final contract.

Held

         Appeal allowed.

Issues

1. The main legal issue was to determine the effect of a counter-offer on an original offer thereby establishing whether the seller (Butler Machine Tool Co) could rely on a price variation clause which was present in the standard form.

Here the last offer rule was said to prevail.  This rule was developed in Hyde v Wrench (1840) 3 Beav 334; 49 ER 132 and states that the effect of a counter-offer is to kill the original offer.

This case is said to be an example of the “Battle of Forms”, a situation that

·                  Arises when both parties, for example a buyer and seller of goods exchange inconsistent standard forms during contract negotiations and reach an agreement without deciding whose standard forms should prevail.

·                  Standard Form Contract = a contract that is not individually negotiated by the parties but contains the same terms for all transactions of that type.

·            In approaching this issue, the court suggested two methods; the conflict and the synthesis approaches.

The conflict approach required the court to determine which set of terms prevail. This was generally held to be the party who had the last say in the negotiation.

The synthesis approach required the court to build a contract from both sets of terms, including the terms common to both and those terms upon which the parties were agreed.

·                  Two questions à

1.      Has a contract been concluded at all?

2.      If there is a contract, whose terms prevail?

In relation to question 1, has a contract been formed?  The Master of the Roles Lord Denning assessed whether there was apparent offer and acceptance in the negotiation period.

• Offer = The sellers’ quoted price made subject to the quoted form.
• Counter Offer = Buyer’s request for the machinery and their enclosure of their standard form without the price variation clause.

In Hyde v Wrench (1840) 3 Beav 334; 49 ER 132 “The counter-offer kills the original offer”.

• Acceptance of Buyer’s counter offer = The seller’s acknowledged receipt of the buyer’s order on an acknowledgment slip detached from the bottom of the buyer’s standard form.

Therefore, there was a contract and it was made on the buyer’s terms.

Question 2 – Whose terms prevail?

• Here the court used the ‘Last Shot’ approach – the seller’s acknowledgement by signing the slip of the buyer’s terms was the final acceptance so that there was no price escalation clause.
• The court held that the seller’s apparent attempt to reassert its terms by saying they were filling in the order in accordance with their revised quotations of May 23”, despite signing the buyer’s acknowledgment slip was unsuccessful and was treated by the court as merely a method of identifying the machine.
• Furthermore, according to Hyde v Wrench a counter-offer acts to kill any previous offer.  Therefore, When a counter-offer is involved the last counter-offer dictates the terms of the contract.

Decision

The court’s decision held that the contract was made on the Buyer’s terms, without a price variation clause.  Therefore the Seller had no right to claim the extra manufacturing fee and the appeal was allowed.

SUMMARY OF JUDGMENTS

Lord Denning MR

Lord Denning MR approached the case observing the documents alone, concluding that the price variation clause in the sellers’ form continued through the whole dealing, so the sellers were entitled to rely on it.  He confirms that the sellers’ did all that was necessary and reasonable to bring the price variation clause to the buyers’ attention.

Lawton LJ

Agreed with Lord Denning MR that as according to Hyde v Wrench a counter-offer acts to kill any previous offer.

Once the tear of slip had been returned and received by the Buyer, the contract was made.  This contract did not include the small print conditions on the back of the quotation, because the counter offer on the buyer’s terms was the offer accepted.  Therefore it was a fixed price contract without a price escalation clause.

The sentence in the letter accompanying the tear-off slip dated 5 June 1969 did not amount to a counter-offer, nor could it be said that this proposed counter-offer was accepted once the buyer received the goods.  The Buyer’s had clearly indicated they were not accepting any price escalation clause in any contract made with the Seller.

Describe LLP (Limited Liability Partnership).

Limited Liability Partnership basically used in partnership. As name suggest that limited liability means in partnership all the liability should limited. It is a kind of mix business entity or we can say that a hybrid business entity. It is related to corporation, partnership or proprietorship.

So Limited Liability partnership is hybrid business entity having certain characteristics of both a corporation and a partnership or sole proprietorship.

According to LLP in limited liability partnership the liability of a each partnership partner are limited and flexible.

 Concept of LLP -

                                    The LLP concept is based on two separate entity concepts, a partnership and limited liability. Before the LLP became available as an entity choice for business owners, the concept of a partnership and limited liability were mutually exclusive. The LLP entity is often the ideal choice for business offering specific types of professional services.

Characteristics of LLP –

                                          There are many characteristics of LLP but here I can explain few which are important.

                                     i.            In LLP minimum number of partners is 2 and there is no maximum.

                                   ii.            Perpetual succession is an important feature of LLP.

                                 iii.            LLP shall be a corporate body and a legal entity separate from its partners

                                  iv.            Every LLP should have two "Designated partners" at least one of whom should be a resident Indian satisfying the conditions stipulated by the central government.

                                    v.            No exposure of personal assets of the partner, except in cases of fraud.

                                  vi.            An intending unlimited liability partnership firm seeking to convert itself into a LLP is required to apply to the Registrar as perform 17 which should be accompanied by written consent from all creditors.

                                vii.            LLP shall maintain annual accounts.

                              viii.            LLP can also take actions like mergers amalgamations. So there are provisions for winding up and dissolution.

                                  ix.            The LLP allow its members the flexibility of organizing their internal structure as a partnership based on an agreement.

Advantages –

                     LLP has many advantage in business. Some of advantages are -

1.      There is no requirement of minimum capital contribution.

2.      There is no restriction as to maximum number of partners in LLP.

3.      The LPP is easy to establish.

4.      The LLP is a separate legal entity.

5.      In LLP less Cost is required for formation as Compared to a company.

6.      LLP is easy to dissolve or wind-up.

7.      LLP & its partners are distinct from each other

8.      Partners are not liable for Act of other partners.

Disadvantages –

        In LLP under some cases, liability may extend to personal assets of         partners

        LLP cannot raise funds from Public

       In LLP there is no separation of Management from owners.

Difference between Partnership and LLP –

Basis Registration Legal entity Liability No. of partners. Capital contribution

Partnership Not compulsory. Not a separate legal entity. Unlimited, can extend to the personal assets of the partners. 2- 20 partners The contribution in capital is required in partnership.

LLP Compulsory registration required with the ROC. Is a separate legal entity. Limited to the extent of the contribution to the LLP. Minimum of 2. No maximum No requirement of minimum capital contribution.

.which article constitute in Kashmir ?

 Article 370 constitute in Jammu & Kashmir. We can  understand to article 370 as a special status of Jammu Kashmir. It has a long and significance background.

Now I am explaining a brief summary about Article 370.

Consequences of article 370 –

1. Secessionism spread to other states -

                                                                 The venomous tendencies of secessionism and separatism, strengthened by those, who incorporated the baneful Article 370 in the Indian Constitution, later on spread to Nagaland, Meghalaya, Mizoram and the Punjab.

2.  Regionalism and parochialism  -

                                                             The Article 370 tanned and fed the forces of regionalism, provincialism, parochialism and obscurantism. It created regional conflicts, collisions and controversies in truncated India.

 

3.  Denial of Fundamental right to purchase property -

                                                                                           Under Article 370, citizens of India cannot purchase immovable property in the State of Jammu and Kashmir, but the people of Kashmir can purchase property in other states of India.

4.  Deprivation of the right to vote -

                                                        The citizens of India cannot become the citizens of Jammu and Kashmir. Due to Article 370, they are deprived of their right to vote in the elections to the state assembly or municipal council or Panchayats. 

5.  Denial of Jobs -

                                 On account of Article 370, Indian citizens cannot get jobs in the state of Jammu and Kashmir. All the jobs in the state are reserved for the citizens of the state. 

6. Detrimental to women of the state -

                                                           Article 370 is highly detrimental to the women, who are even born and brought up in the state of Jammu and Kashmir. If a woman, who is permanent citizen of the state, gets, married to a man who is not a citizen of the state, she loses her properly. She is deprived of even her ancestral property. In the state of Jammu and Kashmir, domicile certificates issued to women are valid up to their marriage only. They have to acquire fresh 'Permanent Residence Certificate' after their marriage.