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Florida Construction Law Update

The Benefits of Written Arbitration Agreements in an Online World

Posted in Construction, Construction Contracts

In an increasingly digital and cost-conscious business environment, many companies in the construction industry may desire to provide its terms and conditions for dispute resolution in arbitration to its customer electronically by posting those terms on the Internet, rather than providing a hard copy of same. This practice may also enable businesses to achieve better consistency of terms across contracts and provide their constituents with easier access to key terms.  This article discusses the growing body of case law addressing whether parties can be bound by terms of an arbitration provision which were not incorporated in the written contract, but were made available on one party’s company website.

Among the courts that have addressed the issue in Florida, the Fourth District Court of Appeal has taken the most restrictive view of incorporation of online terms into written agreements. In Affinity Internet, Inc. v. Consolidated Credit Counseling Svcs., Inc., 920 So. 2d 1286 (Fla. 4th DCA  2006), the court refused to enforce an arbitration clause contained in a service provider’s online terms and conditions where the written agreement between the parties stated that it was “subject to all of [the service provider’s] terms, conditions, user and acceptable use policies located at [the service provider’s website].” Id. at 1287. In the court’s view, the “subject to” language of the contract did not constitute “clear language evidencing an intention of the parties to incorporate the terms of the collateral document.” Id. at 1288. The court further noted that the terms and conditions were not attached to the parties’ agreement and that the plaintiff “was never at any time subsequent to the signing of the contract given a copy of the collateral document or the information contained therein.” Id. at 1286.  The document provided to the other party should state specifically that the online terms and conditions are “incorporated by reference” into the document delivered to the other party. Id. at 1288.

Similarly, in General Impact Glass & Window Corp., v. Rollac Shutter of Texas, Inc., 8 so. 3d 1165 (Fla. 3d DCA 2009), throughout the course of the parties’ dealings, a separate document, Rollac’s terms and conditions, were only available on Rollac’s website, in Rollac’s catalog, but not incorporated in the contract.  The terms and conditions provide for dispute resolution in arbitration, and a Texas choice of law. Id. at 1166.  In reversing the trial court after it compelled arbitration, the appellate court emphasized that the terms and conditions were never signed by plaintiff and were never expressly incorporated into or attached to any of the documents that formed the contract between the parties Id. at 1167.  As the provisions relating to alternative dispute resolution were only found on Rollac’s website and in the Rollac catalog, the Court found that the terms were part of a separate document and not incorporated into the writings exchanged between the parties.  Because that separate document was not incorporated into the writings exchanged between the parties, General Impact was not bound by it. Id.

As arbitration continues to be a popular forum for resolving construction-related disputes, it is imperative that those in the construction industry heed the ever-evolving case law relating to construction contracts and disputes.  In an environment where the trend is moving towards paperless operation, it is important to remember that courts still tend to honor the classic pen-to-paper approach.  This line of reasoning, of course, may extend beyond arbitration clauses.  It may well apply to any material terms and conditions parties seek to incorporate by reference into agreements.