Gardner Zemke Co. v. Dunham Bush, Inc.

Gardner Zemke Co. (Plaintiff) was a general contractor awarded a large contract from the Department of Energy (DOE). Plaintiff awarded a subcontract to Dunham Bush, Inc. (Defendant) to supply air-conditioning units for the DOE project. Plaintiff sent a purchase order requesting the goods to Defendant, and Defendant replied with an acknowledgement form containing substantial warranty disclaimers. The acknowledgement form also contained a provision that silence by Plaintiffwould be interpreted as acquiescence to the new agreement. Plaintiff and Defendant went forward with the transaction without resolving discrepancies between the purchase order and the acknowledgement form. Plaintiff alleged that the goods provided by Defendant did not conform to its specifications, and thus Plaintiff was required to pay additional installation costs for the nonconforming goods. A few months after the air-conditioners were installed, DOE complained to Plaintiff that two were not working properly. Plaintiff requested examination of the units by Defendant, but Defendant refused to provide this service unless DOE issued an additional purchase order expressing willingness to pay for Defendant’s services if the air-conditioners were found to not be problematic. DOE did not issue another purchase order, but instead chose an independent contractor to repair the two air-conditioners. DOE then withheld $20,000 from Plaintiff’s contract to cover the cost of repairs. Plaintiff sued Defendant to recover this money, and the trial court ruled for Defendant on the ground that its acknowledgement form disclaiming warranty operated as a counteroffer which was accepted by Plaintiff. Plaintiff appealed.