Gardner Zemke Co. v. Dunham Bush, Inc. Case Brief Summary | Law Case Explained

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Gardner Zemke Co. v. Dunham Bush, Inc. | 850 P.2d 319 (1993)

Contracts for the sale of goods, which are governed by the Uniform Commercial Code, or UCC, often arise from an informal exchange of standardized forms. But what if the terms in those forms conflict? Which terms come out on top? The court considered a classic battle-of-the forms scenario in Gardner Zemke versus Dunham Bush.

Gardner, a general contractor working on a project for the Department of Energy, or DOE, awarded a subcontract to Dunham to supply air-conditioning units, called chillers, for the project. Gardner sent Dunham a purchase order for the chillers. The order contained a one-year manufacturer’s warranty and required the chillers to conform to certain specs.

In response, Dunham sent Gardner an acknowledgment form detailing extensive warranty disclaimers. It also provided that Gardner’s silence would be interpreted as acquiescence to the new terms. Without discussing the discrepancies in the forms exchanged, the parties went ahead with the transaction.

After the chillers had been delivered and paid for, Gardner discovered that they didn’t conform to the purchase order specs. Gardner paid additional installation costs as a result. Later, the DOE complained to Gardner that two of the chillers weren’t working properly. Gardner asked Dunham to provide on-site warranty repairs, but Dunham refused to do so unless the DOE agreed to pay up in the event that the chillers weren’t found to be problematic.

The DOE chose to hire an independent contractor to repair the two chillers and withheld twenty thousand dollars from Gardner’s contract to cover the cost of the repairs.

Gardner sued Dunham to recover the withheld money. The trial court ruled in favor of Dunham on the ground that its acknowledgment form disclaiming warranty was a counteroffer that Gardner accepted by its silence. Gardner appealed to the New Mexico Supreme Court.

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