State Courts Disagree About Incorporating Arbitration Agreements By Reference
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One way to challenge the very existence of an agreement to arbitrate is to say that the parties’ contract said nothing about arbitration and did not validly incorporate any other document calling for arbitration. Oklahoma and Alabama have recently come out at opposite ends of the spectrum in terms of what kind of notice must be given a consumer to incorporate an arbitration agreement from a secondary document.
In Walker v. Builddirect.com Technologies, Inc., 2015 WL 3429364 (10th Cir. 2015), the federal appellate court refused to compel arbitration of a dispute, because under state law the arbitration provision was not incorporated by reference into the contract signed by the parties. That contract said it was subject to the seller’s “terms of sale,” but did not list those terms or direct the customer to the website where those terms could be found. The Tenth Circuit had certified the question of whether the website terms were incorporated by reference to the Oklahoma Supreme Court, which found they were not. For future drafters, the Oklahoma decision notes:
If BuildDirect intended to make the online “Terms of Sale” part of the parties’ agreement, BuildDirect could easily have accomplished that purpose by drafting the Contract employing words of express incorporation or clearly referencing, identifying and directing the Walkers to the document to be incorporated.
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