The importance of understanding written terms and conditions and having written contracts cannot be stressed enough. The recent case of Aqua-Chem, Inc. v. D&H Machine Service, Inc., highlights these points.
Aqua-Chem owned large coolers that were to be installed on U.S. Navy destroyers. Aqua-Chem needed the coolers machined, and subsequently hired D&H to perform the machining. D&H incorrectly machined the coolers, damaging them. Aqua-Chem had to replace the coolers at an additional cost of approximately $191,000. Aqua-Chem sued D&H and prevailed following a bench trial.
Prior to D&H machining the coolers, Aqua-Chem sent purchase orders to D&H which specifically stated, among other conditions, that: 1) the written purchase orders controlled over all other documents and oral statements, and 2) performing the machining services constituted acceptance of the purchase orders in their entirety. D&H never signed the purchase orders, but did machine the coolers and returned them to Aqua-Chem.
D&H argued that it orally rejected the purchase orders and thus, did not perform the machining subject to the unilaterally imposed written terms and conditions. The Court rejected this argument finding that the purchase orders explicitly provided that performance of the job was acceptance of the terms and conditions as written. Any modification of those terms must have been in writing and before the job was performed.
D&H lost and the judgment awarding Aqua-Chem full replacement cooler costs was upheld on appeal. Additionally, D&H was ordered to pay Aqua-Chem's attorneys' fees.
This case highlights the importance of reading and understanding all the terms and conditions of a contract before performance. And, further, if certain terms are not desired, then those terms must be addressed in writing before performance is done.