Reference to Arbitration in Contract Was Sufficient Notice of Arbitration Clause

Homeowners who claimed not to have read the contract nonetheless signed a 10-page form with two critical items: (1) a check box indicating arbitration and not litigation for dispute resolution, and (2) incorporation by reference of general conditions containing a more detailed arbitration clause. A court has determined that they agreed to arbitration.

The parties signed an AIA A101-2007 contract form. Article 13.2 states, in part:

§ 13.2 BINDING DISPUTE RESOLUTION

For any Claim subject to, but not resolved by mediation pursuant to Section 15.3 of AIA Document A201-2007, the method of binding dispute resolution shall be as follows: (Check the appropriate box. If the Owner and Contractor do not select a method of binding dispute resolution below, or do not subsequently agree in writing to a binding dispute resolution method other than litigation, Claims will be resolved by litigation in a court of competent jurisdiction.)

[X] Arbitration pursuant to Section 15.4 of AIA Document A201-2007

[ ] Litigation in a court of competent jurisdiction

[ ] Other (Specify)

. . .

Although claiming not to have read the contract before signing, the homeowners did not dispute that the arbitration box had been checked on the signed contract. But they argued that this was insufficient notice of any intent to arbitrate.

The court disagreed. The parenthetical comment clearly noted that litigation would be the default choice if no option was selected, and the arbitration box was the only one checked. Also, the A201 General Conditions were referenced both on the first page of the signed A101 form and in § 16.1.2 of that form (and in § 13.2 quoted above). That the more detailed arbitration clause was not in the A101 form itself was of no consequence, as the homeowners were on notice – even if they chose not to read it – via plain language in the contract.

Consistent with case law in most states, parties are bound by what they sign even if they fail to read the print, whether large or fine. The homeowners here were bound to the outcome of arbitration proceedings with the contractor. The case is Tedeschi v. D.N. Desimone Constr., Inc., 2017 U.S. Dist. LEXIS 69695 (D. N.J., May 8, 2017) (LEXIS subscription required).

About Stan Martin

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Stan Martin holds a law degree and an undergraduate degree in architecture. He has been involved with the construction industry for more than 45 years, working in construction prior to law school and beginning his construction law practice. Over the course of his career, he has served on boards and committees for organizations including the Associated General Contractors of Massachusetts, the Boston Society of Architects, and the Massachusetts Building Congress.

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