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

1977 Court of Appeal case involving contract formation and standard forms

Butler Machine Tool Co Ltd v Ex Cell O Corp (England) Ltd [1977] EWCA Civ 9 is a leading English contract law case. It concerns the problem found among some large businesses, with each side attempting to get their preferred standard form agreements to be the basis for a contract.

Butler Machine Tool Co Ltd made and sold machine tools. They sent a letter to Ex Cell O on May 23, 1969, offering Ex Cell O some new machinery for £75,535. With it were Butler's standard contract terms. These included a price variation clause so that if their manufacturing costs went up, the price rise would be passed on to Ex Cell O. Ex Cell O replied on May 27 and said they would order the machinery, but on Ex Cell O's own standard terms. Ex Cell O's standard terms did not have a price variation clause. Butler replied on June 5. It replied on the tear off slip from Ex Cell O's terms. At the bottom of this slip it read, "We accept your order on the terms and conditions stated therein." But Butler added a letter reasserting that the deal was being made under Butler's own terms, from the May 23 letter. A while later, nothing further had been said, and Butler delivered the machinery. They asked for £75,535, plus £2,892 according to their price variation clause. Ex Cell O refused to pay the extra. Butler sued Ex Cell O.

The Court of Appeal held that the contract was on Ex Cell O's terms, and therefore the increase in price was ineffective. The majority followed a traditional offer and acceptance analysis. But Lord Denning MR's judgment took the approach that one should look for material agreement and the court should have the power to ignore irreconcilable terms. His judgment led as follows. Lawton LJ concurred. Bridge LJ agreed with the result.