## Bottom Line

- Contract formed on February 2. AlloyWorks’s acknowledgment was not an expressly conditional acceptance.
- The affected-unit cap ($375,000) and the blanket consequential-damages exclusion in AlloyWorks’s acknowledgment/invoice are **not** part of the contract.
- The February 3 email exchange modified the contract: delivery is April 15, and the operative aggregate liability cap is **200% of the total PO price = $3,000,000**.
- Meridian’s otherwise recoverable damages, before the cap, are **$3,200,000**.
- After applying the $3,000,000 cap, AlloyWorks’s maximum liability is **$3,000,000**.

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## 1. Contract Formation and the Battle of the Forms

Meridian’s purchase order was an offer. AlloyWorks’s February 2 acknowledgment was a timely, definite expression of acceptance even though it contained different or additional terms.

The acknowledgment’s statement that “Seller’s standard terms apply” is not enough to make acceptance expressly conditional. It did not clearly say AlloyWorks would refuse to perform unless Meridian accepted its terms. Therefore, a contract was formed despite the form conflict.

The PO also said “Acceptance is expressly limited to these terms.” Under the governing Commercial Code rules, that prevents AlloyWorks’s **additional** terms from becoming part of the contract. And conflicting **different** terms in the forms are displaced unless the parties later agree to one of them.

So:

- The PO’s 200% aggregate cap and the acknowledgment’s affected-unit cap conflicted.
- The PO’s allowance of foreseeable production-interruption loss conflicted with the acknowledgment’s “no consequential damages” clause.
- The April 1 and April 15 delivery dates conflicted.

AlloyWorks’s affected-unit cap and no-consequential-damages exclusion therefore did **not** become contract terms.

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## 2. Effect of the February 3 Email Exchange

The email exchange was a valid modification:

- Both representatives had authority.
- The modification was clear and mutual.
- No new consideration was required.

The emails establish:

- Delivery is **April 15**.
- All recoverable damages remain subject to the PO’s **200% aggregate cap**.
- The **affected-unit cap** is rejected.
- There is **no blanket exclusion of downtime/consequential damages**.

Thus, the operative liability cap is:

> **200% × $1,500,000 = $3,000,000**

The post-delivery invoice had no effect. It was sent after contract formation, and Meridian never assented to it.

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## 3. Damages Calculation

### Recoverable damages before cap

| Category | Amount | Treatment |
|---|---:|---|
| Cover and repair costs | $620,000 | Recoverable direct damages |
| Inspection costs | $80,000 | Recoverable direct damages |
| Production-interruption loss | $2,600,000 | Recoverable consequential damages, foreseeable because AlloyWorks knew the boards controlled Meridian’s only active line |
| Mitigation savings | ($240,000) | Reduces the production-interruption loss |
| Expedited freight | $140,000 | Recoverable consequential/mitigation expense, caused by the foreseeable interruption |
| Lost profit from particular customer renewal | $1,100,000 | **Not recoverable**; the customer/renewal was never identified and AlloyWorks had no reason to know of it before contracting |
| **Total before cap** | **$3,200,000** | |

Arithmetic:

- $620,000 + $80,000 = $700,000
- $2,600,000 − $240,000 = $2,360,000
- $700,000 + $2,360,000 + $140,000 = **$3,200,000**

The $1,100,000 customer-renewal lost profit is excluded.

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## 4. Application of the Cap

The cap applies **after** calculating otherwise recoverable damages.

- Otherwise recoverable damages: **$3,200,000**
- Cap: **$3,000,000**
- Because $3,200,000 > $3,000,000, the capped recovery is:

> **$3,000,000**

Meridian’s demand of $4,300,000 is therefore overstated by at least the excluded customer-renewal lost profit, and the cap further reduces recovery to $3,000,000.

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## 5. AlloyWorks’s Settlement and Litigation Position

AlloyWorks should **not** rely on the $375,000 affected-unit cap or on a blanket consequential-damages exclusion. Those arguments are legally unsupported on these facts.

AlloyWorks’s strongest position is:

1. Liability is capped at **$3,000,000**, not $375,000.
2. The particular customer-renewal lost profit of **$1,100,000** is not recoverable.
3. Even if Meridian proves all other listed damages, the $3,000,000 cap is the ceiling.

A reasonable settlement position would be to offer **up to $3,000,000** in exchange for a full release. AlloyWorks should not agree to pay more than $3,000,000, because the operative aggregate cap should limit any judgment to that amount.