Enforceable Contract Formation by Conduct amid Conflicting Forms: Sixth Circuit’s UCC 2-207 Clarification

Introduction

In BorgWarner PDS Irapuato S. de R.L. de C.V. v. Parker Hannifin Corp., the Sixth Circuit confronted a classic “battle of the forms” under Ohio’s version of the Uniform Commercial Code (UCC). BorgWarner (a Mexican-based automotive supplier) and Parker Hannifin (an Ohio parts manufacturer) began dealing without a single signed contract, exchanging quotes, purchase orders, acknowledgments, price‐increase notices and ultimately performing for months. When Parker sought to increase prices because of raw‐material inflation, BorgWarner refused, insisting its own purchase‐order terms prohibited unilateral price hikes. Parker countered that its quote terms controlled. The district court agreed with Parker, but the Sixth Circuit reversed, holding that neither party’s boilerplate paperwork by itself created the binding agreement and that the parties had in fact contracted by their performance. The case was remanded to determine what terms (if any) from the parties’ writings govern, supplemented by UCC default provisions.

Summary of the Judgment

The February 4, 2021 Parker quote was not a binding “offer” under UCC 2-204 because it (a) described prices as “tentative” and “subject to change,” (b) was based on estimates of annual usage and minimum quantities, and (c) invited further discussion rather than requiring mere assent.
BorgWarner’s purchase orders did not form a contract on Parker’s terms: they expressly rejected any outside conditions and substituted BorgWarner’s own terms—including a requirements‐contract mechanism—so there was no “meeting of the minds.”
Nor did Parker’s conduct (shipping under BorgWarner’s revised purchase order) clearly show assent to BorgWarner’s terms, given Parker’s prior, consistent rejection of them.
Under UCC 2-207(c) and Ohio Rev. Code § 1302.10(C), parties who “recognize the existence of a contract” by conduct (shipping, invoicing, paying) are bound by the terms on which their writings agree plus UCC default rules. Here, the parties had an enforceable—but unwritten—contract formed by performance.
The case is remanded for the district court to identify which (if any) of the parties’ written terms survived and to fill gaps with UCC default provisions (e.g., reasonable notice requirements for termination or price adjustment).

Analysis

1. Precedents Cited

Dyno Construction Co. v. McWane, Inc., 198 F.3d 567 (6th Cir. 1999) – held that a price quotation can be an offer only if it shows that mere acceptance ripens it into a contract.
Kostelnik v. Helper, 770 N.E.2d 58 (Ohio 2002) – requires a “meeting of the minds” on essential terms (identity, subject matter, quantity, price).
Avery Dennison Corp. cases (Ohio Ct. App.) – recognize that parties may contract by performance under UCC 2-207(c) even if their forms never align.
Dorton v. Collins & Aikman Corp., 453 F.2d 1161 (6th Cir. 1972) – conditional acceptances (battle of the forms) require “direct and distinct” language to operate as an acceptance.
Gage Products v. Henkel Corp., 393 F.3d 629 (6th Cir. 2004) – illustrates impact of post-order communications and performance on which terms govern.

2. Legal Reasoning

The court’s reasoning proceeded in three steps:

Offer Analysis (UCC 2-204): A quotation is an offer only if it is sufficiently definite—i.e., it sets out all essential terms and indicates that mere assent concludes the deal. Parker’s quote was labeled “tentative,” tied to estimates, invited review, and was followed by months of negotiation over terms and logistics.
Acceptance Analysis (UCC 2-207): BorgWarner’s purchase orders expressly conditioned acceptance on BorgWarner’s own terms and rejected any additional terms, so they could not accept Parker’s offer. Conversely, Parker consistently refused to accept BorgWarner’s battle-of-the-forms terms.
Contract by Performance (UCC 2-207(c)): Neither party’s standalone paperwork created the contract, but their conduct—shipping, invoicing, paying—for months after exchanging competing forms demonstrated mutual recognition of a contract’s existence. Under UCC 2-207(c), the binding terms consist of the subset of their writings on which they agreed plus any UCC gap-fillers.

3. Impact on Future Cases

Clarifies that in “battle of the forms” situations, courts must consider offer/acceptance rules under UCC 2-204/2-207 before resorting to contract-by-conduct.
Emphasizes that even detailed, customized quotes labeled “subject to change” are unlikely to be binding offers absent clear language pledging fixed terms.
Alerts businesses in the automotive and manufacturing sectors to the risk of unwittingly contracting by performance if competing boilerplate forms are exchanged without reconciliation.
Reinforces the necessity of expressly choosing governing terms (and signing on the line) or risk default UCC terms filling in indefinite gaps.

Complex Concepts Simplified

“Battle of the Forms” (UCC 2-207): When buyer and seller exchange written forms (quotes, purchase orders, acknowledgments) with different terms, none may match exactly. UCC 2-207 tells us how to decide whether an offer exists, whether acceptance is effective despite added terms, and, if all else fails, what rules apply when parties act like they have a contract anyway.
Offer vs. Invitation to Negotiate: A price quotation becomes an offer only if its language and context show that the seller meant: “I bind myself if you simply say ‘I accept.’” If it’s labeled “estimates” or “subject to revision,” it’s usually just a starting point for bargaining.
Contract by Conduct (UCC 2-207(c)): Even if the writings never line up, if both sides act as though there’s a contract—shipping, accepting, paying—UCC 2-207(c) steps in and stitches together the terms they did agree on plus standard UCC defaults (e.g., price, delivery, termination rules).
Requirements Contract vs. Fixed‐Quantity Contract: A requirements contract obligates the buyer to purchase “all I need” from one seller; a fixed‐quantity contract locks in a specified amount. Here, the parties never reconciled which type they had, so their papers failed for lack of agreement on a key term.

Conclusion

BorgWarner v. Parker Hannifin stands as a modern touchstone on how UCC Article 2 resolves disputes when companies trade conflicting forms without signing a clean, unified contract. It teaches practitioners to:

Draft quotes and orders with precision—avoid “tentative” language if you intend to bind.
Reconcile opposing standard‐form terms promptly in writing or risk contracting by mere performance.
Remember that UCC 2-207(c) may impose default terms when neither side’s boilerplate prevails.

On remand, the district court must identify which, if any, written provisions survive in the parties’ unwritten contract and fill gaps under the UCC to determine each side’s continuing obligations and any damages owed. This ruling will guide future “battle of the forms” litigation and clarify risk management in commercial deals.