Step-Saver Data Systems, Inc. v. Wyse Technology and the Software Link, Inc

The parties' conduct plainly established contracts: Step-Saver ordered the software, TSL shipped it, and Step-Saver accepted and paid for it. The real dispute was not whether contracts existed, but which terms governed them. Where an oral or informal commercial agreement is followed by a writing that adds terms not expressly adopted by both parties, UCC § 2-207—not the parol-evidence rule or the law of unilateral modification—supplies the governing framework.

The telephone orders and related documents established sufficiently definite agreements even without the box-top license. The goods, quantity, and price were identified, and the UCC filled gaps concerning warranties and other default terms. The unresolved question whether the transaction was technically a sale or license did not make the agreement indefinite, particularly because both parties understood that Step-Saver could transfer copies to buyers of its systems.

The license was not a conditional acceptance under § 2-207(1). A party seeking to make its acceptance conditional must clearly communicate that it will not proceed unless the other side assents to the added terms. Statements that opening the package indicates acceptance, along with an integration clause, did not clearly show that TSL would refuse to transact without the disputed terms.

The refund provision did not change that conclusion on this record. TSL allegedly assured Step-Saver that the box-top license did not apply to it as a reseller; TSL continued selling after Step-Saver refused proposed formal agreements containing comparable disclaimers; and both parties disregarded the license's nontransferability term. Those facts showed that TSL was willing to perform even without acceptance of all license terms.

Step-Saver's repeated receipt of the same form did not create a course of dealing that adopted the form's warranty exclusions. Repetition showed only that TSL wanted those terms, not that the parties reached a shared understanding about them. A seller's repeated unilateral use of a form cannot circumvent § 2-207, especially where the seller unsuccessfully tried to secure the buyer's express agreement.

The warranty disclaimers and damages limitations would substantially shift risk from TSL to Step-Saver and thus materially alter the agreement under § 2-207(2)(b). They therefore remained mere proposals rather than contractual terms. The court reversed the directed verdict on TSL's warranty claims and remanded for determination of whether TSL made enforceable express or implied warranties and whether any other facts affected them.

A fraud claim required proof, by clear and convincing evidence, of a material misrepresentation, intent to deceive, intent to induce reliance, justifiable reliance, and resulting damage. On review of the directed verdict, the court considered the evidence in Step-Saver's favor but concluded that the evidence could not establish fraudulent intent.

Step-Saver relied principally on testimony from a TSL cofounder that no program was "completely compatible" with Multilink Advanced. But the sales representations concerned practical compatibility—the industry understanding that products work together in nearly all relevant situations—not absolute or theoretical compatibility in every possible circumstance. Because complete compatibility is virtually unattainable, the testimony did not show that TSL knew its practical-compatibility representations were false.

The court noted that compatibility can be tested and is generally a factual representation rather than mere opinion. Even so, the proof here did not support the distinct and necessary inference that TSL knowingly deceived Step-Saver. The directed verdict for TSL on intentional misrepresentation was therefore affirmed.

The implied warranty of merchantability asks whether goods are fit for their ordinary purposes and of quality generally acceptable in the trade. Step-Saver showed that certain WY-60 keyboard features, including repeatable NUM LOCK and CAPS LOCK keys, could cause troublesome results when used with the Multilink Advanced operating environment.

That showing established a problem between independently designed components, not a defect in the WY-60 terminals themselves. Wyse introduced undisputed evidence that competing terminals experienced the same difficulties under Multilink Advanced, that the WY-60 conformed to industry specifications for terminals used with IBM AT- or XT-based multi-user systems, and that more than one million units had been sold.

A component built to prevailing standards is not unmerchantable merely because it does not work properly with a particular incompatible component, just as a standard bolt is not defective because a particular nut does not fit it. The district court properly withheld the merchantability claim from the jury.

After reviewing the record and the district court's explanation in its opinion denying a new trial, the Court of Appeals found no abuse of discretion in excluding the unsent letter from Wyse or in declining the requested rebuttal testimony. These rulings did not independently justify reversal.