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3. Whether Additional Terms Become Part of the Final Contract if the Parties’ Writings Form a Contract An additional term is one that adds to, but does not contradict, the offer’s terms. A different term varies or contradicts the offer’s terms. If the parties’ writings form a contract, additional terms are treated as proposals for inclusion in the contract. Their treatment depends on whether the transaction is between merchants. Courts differ over the treatment of different terms. a. Rules for Additional Terms in a Contract between Merchants Between merchants , additional terms in the acceptance or confirmation become part of the contract, unless: the offer expressly limits acceptance to the offer’s terms, the additional terms materially alter the offer, or notification of objection to the additional terms either has already been given or is given within a reasonable time after notice of the additional terms is received. Whether Additional Terms Materially Alter the Offer An additional term materially alters the offer if it would cause the offeror unreasonable surprise or hardship (usually economic hardship) were it incorporated into the agreement without the offeror’s express awareness. Examples include:
a requirement to arbitrate disputes, indemnification, a limitation of liability or warranty disclaimer, or a term reallocating risk of loss.
b. Rule if One Party Is Not a Merchant If the parties’ writings form a contract, and one party is not a merchant, then any additional terms become part of the contract only if the original offeror assents to them. c. Whether Different Terms (as Opposed to Additional Terms) Become Part of the Final Contract Some courts treat different terms the same as additional terms. Others apply the knock- out rule, in which contradictory terms cancel each other out, and the UCC’s gap-filling rules supply any relevant, missing terms. Still other courts treat an acceptance with different terms the same as a counteroffer at common law.
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