In commercial dealings it often happens that the offeree, while

signifying to the offeror its intention to accept the offer

(“acknowledgement of order”), nevertheless includes in its declaration

terms additional to or different from those of the offer. Para. (1) of

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this article provides that such a purported acceptance is as a rule to be

considered a rejection of the offer and that it amounts to a counteroffer

by the offeree, which the offeror may or may not accept either

expressly or impliedly, e.g. by an act of performance.

The principle according to which the acceptance must be the mirror

image of the offer implies that even unimportant differences between

the offer and the acceptance permit either party at a later stage to

question the existence of the contract. In order to avoid such a result,

which a party may well seek merely because market conditions have

changed unfavourably, para. (2) provides for an exception to the

general rule laid down in para. (1) by stating that if the additional or

modified terms contained in the acceptance do not “materially” alter

the terms of the offer, the contract is concluded with those

modifications unless the offeror objects without undue delay.

What amounts to a “material” modification cannot be determined in

the abstract but will depend on the circumstances of each case.

Additional or different terms relating to the price or mode of payment,

place and time of performance of a non-monetary obligation, the extent

of one party’s liability to the other or the settlement of disputes, will

normally, but need not necessarily, constitute a material modification

of the offer. An important factor to be taken into account in this

respect is whether the additional or different terms are commonly used

in the trade sector concerned and therefore do not come as a surprise

to the offeror.

I l l u s t r a t i o n s

1. A orders a machine from B to be tested on A’s premises. In

its acknowledgement of order B declares that it accepts the terms of

the offer, but adds that it wishes to be present at the testing of the

machine. The additional term is not a “material” modification of

the offer and will therefore become part of the contract unless A

objects without undue delay.

2. The facts are the same as in Illustration 1, the difference being

that in its acknowledgement of order B adds an arbitration clause.

Unless the circumstances indicate otherwise, such a clause amounts

to a “material” modification of the terms of the offer, with the result

that B’s purported acceptance would constitute a counter-offer.

3. A orders a stated quantity of wheat from B. In its

acknowledgement of order B adds an arbitration clause which is

standard practice in the commodity sector concerned. Since A

cannot be surprised by such a clause, it is not a “material”

modification of the terms of the offer and, unless A objects without

undue delay, the arbitration clause becomes part of the contract.