Daitom invited bids from manufacturers of commercial vacuum dryers to supply it with machinery Daitom needed to build a chemical manufacturing plant.

Pennwalt submitted a proposal specifying the equipment to be sold, the price, and delivery and payment terms. Several pages of Pennwalt’s pre-printed terms and conditions were attached and incorporated into its bid, including a clause providing for a one-year statute of limitations and a clause disclaiming any and all implied warranties. Daitom accepted Pennwalt’s proposal by issuing its own

“purchase order” containing 17 pages of detailed terms and conditions. The purchase order language did not contain a statute of limitations, but it did include an implied warranty clause. When the machinery sold by Pennwalt failed to work properly, Daitom brought a proceeding against Pennwalt more than one year later, alleging, among other things, a breach of the implied warranty.

CASE QUESTIONS

1. Should the court apply the knockout rule to this case? (Be sure to explain how the knockout rule works.)
2. What steps could Daitom have taken to avoid a battle of the forms?