BGT Group, Inc. v. Tradewinds Engine Services, LLC
2011 WL 2200800, 62 So. 3d 1192, 2011 Fla. App. LEXIS 8413 (2011)
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Rule of Law:
For a collateral document to be incorporated by reference into a contract, the primary contract must not only state that it is subject to the collateral document, but must also sufficiently describe that document so that the parties' intent to be bound by its terms can be ascertained.
Facts:
- BGT Group, Inc. (BGT) issued a quote to Tradewinds Engine Services, LLC (Tradewinds) for used gas turbine parts.
- The quote stated, 'ALL QUOTATIONS, INVOICES AND ORDERS ARE SUBJECT TO THE ATTACHED BGT TERMS AND CONDITIONS,' but no terms and conditions were attached.
- Tradewinds responded with a purchase order, and BGT sent back an invoice which also stated, 'ALL ORDERS ARE SUBJECT TO ATTACHED BGT TERMS AND CONDITIONS,' again without attaching the document.
- Tradewinds' representatives did not request a copy of the terms and conditions during the transaction.
- After Tradewinds picked up the parts, it discovered that BGT had allegedly misrepresented their condition.
- Tradewinds did not make the final payment due to the dispute over the parts' condition.
- Months after the dispute arose, BGT sent an e-mail to Tradewinds demanding final payment and, for the first time, attached a copy of its 'General Terms & Conditions of Sale,' which contained an arbitration clause.
Procedural Posture:
- BGT Group, Inc. (BGT) filed a demand for arbitration against Tradewinds Engine Services, LLC (Tradewinds).
- Tradewinds filed a complaint against BGT for breach of contract and fraud in the circuit court (trial court).
- In the trial court, BGT filed a motion to compel arbitration.
- Tradewinds filed a motion to stay arbitration.
- The circuit court held an evidentiary hearing and entered an order denying BGT’s motion to compel arbitration and granting Tradewinds' motion to stay arbitration.
- BGT appealed the trial court's non-final order to the District Court of Appeal.
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Issue:
Does a contract incorporate a collateral document by reference when it mentions the document (e.g., 'subject to attached terms and conditions') but fails to either attach the document or sufficiently describe it or its location?
Opinions:
Majority - Gross, C.J.
No. A contract does not incorporate a collateral document by reference if it fails to sufficiently describe the document, rendering it impossible to ascertain the parties' intent to be bound by its terms. To be validly incorporated, a collateral document must be described with enough specificity for the other party to find and review it. In this case, the quote and invoice merely referred to 'attached' terms and conditions that were not, in fact, attached and provided no other information about the document or where it could be located. This description is too nebulous and insufficient to bind Tradewinds to the arbitration clause contained within the unattached document, which Tradewinds had never seen. The court distinguished this from cases where collateral documents were adequately described by name, edition, or specific location where they could be examined, thereby showing a clear intent by both parties to include them in the agreement.
Analysis:
This decision reinforces the formal requirements for incorporation by reference in contract law, emphasizing that a mere mention of external terms is insufficient. It serves as a warning to drafters that to bind another party to terms in a separate document, they must either physically attach it or describe it with such specificity (e.g., title, edition, specific web address) that the other party can identify and access it. The ruling protects parties from being bound by unseen and vaguely referenced terms, upholding the principle of mutual assent. Future cases will likely use this decision to scrutinize vague references to external terms, particularly in boilerplate language.
