Corinthian Pharmaceutical Systems, Inc. v. Lederle Laboratories
United States District Court, S.D. Indiana, Indianapolis Division, 1989.
Author: Jim

Facts: D periodically issued price lists that stated that this was not offer and offers were to be accepted by D and that price can change and any unshipped items or back ordered were to fall under the price at the time of shipment.  P is a distributor that buys DTP vaccine from D.   D had to self-insure due to product liability claims and therefore D planned to increase price of DTP considerably effective May 20.  P found out about it and on May 19, ordered 1000 vials of DTP using D‘s computer telephone system [offer]. P received computer generated confirmation [not acceptance].  D shipped 50 vials to P with a letter that price has gone considerably up and it is D’s policy to sell items at the price at the time of shipping.  But since this is a dramatic price increase, D has shipped 50 vials at the $64 price and for the rest of the order, the new price of $171 applies.  Letter stated that if P wants to cancel order for the 950 vials, it can.

P’s Argument: There was a contract between P and D to deliver 1000 vials for $64/vial.  D accepted P’s offer when send confirmation receipts.  The shipment of the 50 vials should also be considered acceptance.

D’s Argument: No contract between P and D.  D’s terms stated that price subject to change and no contract until D accepts. Shipment of 50 vials just accommodation and no sign of acceptance.

Issue: Was there a contract between P and D where D agreed to sell 1000 vials for $64?

Holding: No

Rationale: In this case, P was the offeror and D was the offoree. It is a settled point that price quotations are mere invitations of offers.  When P made the offer to buy 1000 vials of DTP at $64, D showed no signs of acceptance.  Computer generated confirmations receipts cannot be considered acceptance.  Now the issue is, can the shipment of 50 vials be considered acceptance.  Law: “An order or other offer to buy goods for prompt or current shipment shall be construed as inviting acceptance either by a prompt promise to ship or by the prompt or current shipment of conforming or non-conforming goods, but such a shipment of non-conforming goods does not constitute an acceptance if the seller seasonably notifies the buyer that the shipment is offered only as an accommodation to the buyer.”  In the current case, D shipped non-conforming goods (50 vials instead of 1000).  The letter clearly stated that this shipment was mere accommodation.  Therefore, this shipment was a counteroffer to P for sale of 950 vials for the new price of $171.  So as can be seen, D at no time accepted P’s offer to sell 1000 vials for $64.