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Toshiba Machine Co.11/10/2005
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2. Did Toshiba breach the contracts?
Also in its second issue, Toshiba contends that even if SPM rejected the machines, there is no evidence that Toshiba breached sales contracts. Toshiba argues that its failure to deliver orbit boring software cannot give rise to a breach of contract claim and that there is no evidence to support the jury's finding that Toshiba breached the contracts. As a subissue, Toshiba argues that Addendum A to the BMC-1000 contract was not a part of the agreement between Toshiba and SPM and therefore could not give rise to a breach of contract claim.
a. Was Addendum A part of the contract?
The jury found that Toshiba and SPM intended to "bind themselves to an agreement regarding the BMC-1000 that included all provisions contained in Addendum A" to SPM's purchase order. Toshiba argues that there is no evidence to support the jury's finding.
Toshiba relies on section 2.207 of the Texas Business and Commerce Code. TEX. BUS. & COM. CODE ANN. ยง 2.207 (Vernon 1994). Section 2.207, captioned "Additional Terms in Acceptance or Confirmation" and often referred to as the "battle of the forms" section of the UCC, provides in part as follows:
(a) A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms.
(b) The additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless:
(1) the offer expressly limits acceptance to the terms of the offer;
(2) they materially alter it; or
(3) notification of objection to them has already been given or is given within a reasonable time after notice of them is received.
(c) Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract. In such case the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of this title.
Significantly, Toshiba does not argue that Maruka's December 16, 1997 proposal to SPM was an offer. Nor does Toshiba point to any other writing that it claims was an offer accepted by SPM's purchase order. Rather, Toshiba contends that this case is governed by section 2.207(c); according to Toshiba, the writings of the parties do not establish a contract.
Toshiba's argument fails because SPM's purchase order was an offer to buy the BMC-1000. The "Terms and Conditions of Purchase" recited on the back of the purchase order state that Toshiba's shipment of the BMC-1000 constitutes acceptance of the purchase order. Therefore, Toshiba accepted the purchase order when it shipped the BMC-1000 to SPM. The "Terms and Conditions of Purchase" also state that acceptance of the purchase order is acceptance of all terms on the front and back of the purchase order. And the merger clause on the back of the purchase order recites that " his purchase order, and any documents referred to on the face hereof, constitute the entire agreement between the parties." (Emphasis added.) The front of the purchase order specifically refers to Addendum A. George Reeve, the SPM employee who generated the purchase order and Addendum A, testified that he discussed the specific terms of the addendum with Toshiba's Olipha
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