Contractual Provisions Contained in Documents Incorporated by Reference Are Enforceable Even if Not Attached to the Contract

CONTRACTUAL PROVISIONS CONTAINED IN DOCUMENTS INCORPORATED BY REFERENCE ARE ENFORCEABLE EVEN IF NOT ATTACHED TO THE CONTRACT

By: Harry Malka, Esq., Malka & Kravitz, P.A.

In Avatar Properties, Inc. vs. Greetham, 2010 WL 476663 (Fla. 2 nd DCA, Feb. 10, 2010) Fred and Linda GREETHAM ("OWNERS") sued Avatar Properties, Inc. and Solivita at Poinciana, Inc., ("DEVELOPER") based on allegations that the roof on their home was defectively designed and installed after their house sustained damage as a result of hurricanes Charley and Frances.

In response to the lawsuit, DEVELOPER filed a Motion to Compel Arbitration. The arbitration provision at issue was contained in the home warranty, which was incorporated by reference into the Purchase and Sale Contract (the "Contract") signed by the OWNERS when they purchased the home. Although the warranty was not attached to the Contract, the Contract stated that the warranty was available for examination at Solivita's offices and, that upon request, the warranty would be attached as an exhibit to the Contract. The OWNERS initialed this paragraph.

In opposing the Motion to Compel Arbitration, OWNERS argued that the arbitration provision was not enforceable because the word "arbitration" was not mentioned in the Contract and because the warranty was not attached to the Contract when OWNERS signed it. The Trial Court denied the Motion to Compel. DEVELOPER appealed.

The issue in this appeal was whether the OWNERS could be bound by an arbitration provision that was referenced in the Contract but not attached to the Contract. The Court of Appeals reversed the trial court, finding that a valid agreement to arbitrate existed. The law in Florida is that where a writing expressly refers to and sufficiently describes another document, that other document, or so much of it as is referred to, is to be interpreted as part of the writing. Courts routinely approve the enforcement of contractual provisions that are incorporated by reference into a contract, including arbitration provisions. In fact, an arbitration clause in a Prime Contract between an owner and a general contractor is enforceable against a subcontractor when the Subcontract incorporates part of the General Contract by reference, including its arbitration provision. In this case, the Court of Appeals found that the OWNERS not only signed the Contract, but that they initialed the provision that incorporated the home warranty by reference. This provision advised them that they could review the warranty at Solivita's offices and of their right to have a copy of it attached to the Contract. The Court of Appeals found that failure on the OWNERS' part to avail themselves of either opportunity was not a basis to find that no agreement existed.

Documents such as drawings, specifications, or general conditions, are often not attached to a construction contract, but are incorporated by reference. This case illustrates the importance of reading and understanding all the provisions of a contract, including the provisions contained in the documents that are incorporated by reference. As demonstrated in this case, Courts will enforce provisions contained in documents that are incorporated by reference in the same manner as if the provisions were contained in the original document.