WALKER v. BUILDDIRECT.COM TECHNOLOGIES INC.

2015 OK 30

Summary: On a certified question from the 10th Circuit Court of Appeals the Oklahoma Supreme Court was asked about the parameters of Oklahoma contract law regarding incorporation by reference of a separate document into the terms of a contract. Walker had purchased materials from Builddirect.com, a Canadian company. Walker's contract was a written contract which recited that it was 'subject' to the sellers 'Terms of Sale', but the contract did not specify what the Terms of Sale were, nor where this document could be found. The Terms of Sale were published on the seller's website, but no indication of this existed on the face of the contract.

Legal Issue: The question posed to the Oklahoma Supreme Court by the 10th Circuit Court of Appeals was:

Does a written consumer contract for the sale of goods incorporate by reference a separate document entitled "Terms of Sale" available on the seller's website, when the contract states that it is "subject to" the seller's "Terms of Sale" but does not specifically reference the website?

The Court noted that Oklahoma's case law on the topic of incorporation by reference is sparse, and that this is an issue of first impression. The concept of incorporation by reference had been affirmed in the past, but the parameters of that concept had yet to be defined. The Court adopted the test of noted legal scholar Samuel Williston who, in his work Williston on Contracts wrote that if the incorporation makes clear reference to the separate document, the identity of the separate document may be ascertained beyond doubt, and the parties to the agreement had knowledge of and assented to the incorporation that it is valid. The court noted that it is of chief importance that a party to be bound by the incorporated material had reasonable notice of and assented to be bound by the terms added by incorporation. Whether the documents to be incorporated were physical or on a website were of no concern, the issues of notice and consent were controlling.

Using these principles, the Court ruled that in this case there was not a proper incorporation by reference to the Terms of Sale. The contract had no information regarding this extrinsic document including, importantly, the location or terms of the document. As such, Walker did not have a reasonable notice of the Terms of Sale.

Discussion: In the United States both federal and state courts can deal with issues of state law. In the past there could be differing interpretations of the state law in federal court from state court. Now, if a question of state law appears before a federal court that is not clear from the state's own statutes and case law, the federal court can certify that question to the supreme court of the state in question for a ruling on that state's law. This serves to ensure that a litigant in a federal court will receive a similar result with a litigant in a state court and thus reduce 'forum shopping' by litigants.