Today’s bit of advice: Don’t make some other contract part of your contract.
That was prompted by this item by the Canadian law firm Bennett Jones. It involves a case before the British Columbia Supreme Court in which a general contractor wanted to refer the dispute to arbitration. The subcontract didn’t contain an arbitration provision, but the prime contract did. And the subcontract included this: “Prime Contract, associated drawings and specifications for the scope of work are attached in Schedule I and form part of this Subcontract Agreement.” That was enough to allow the general contractor to argue that the arbitration provision in the prime contract applies to the subcontract, and it was enough for the court to refer the matter to arbitration.
But it doesn’t make sense to say that the contract between Acme and GenCo is part of the contract between GenCo and SubCo. It’s part how? This ties into a broader issue that I mentioned a few days ago in this post on the LinkedIn group A Manual of Style for Contract Drafting, namely how best to express the concept that the terms of the prime contract flow through to the subcontract. Saying that the prime contract is part of subcontract is sure as heck not the way to do it.
It’s not surprising that in this case the result was a fight. Perhaps the subcontractor would have refused to include an arbitration clause in the subcontract, in which case the general contractor achieved through litigation what it wouldn’t have achieved through negotiation. But looking to achieve your contract goals by winning a fight over suboptimal drafting would be a reckless strategy. I expect that few contract parties think that way.
(For the converse issue, namely failing to make it clear than a separate arbitration provision applies to a contract, see this 2007 post.)
Updated 15.30 8 June 2019: To follow up on my exchange with Vance in the comments, I’m not suggesting that you can’t make provisions of another contract part of your contract. But you should be surgical about it, making explicit any adjustments you need to make to reflect, for example, any difference in parties. And although it’s best to be explicit, you could also say together with any necessary conforming changes (and not mutatis mutandis).
Yes, incorporating an entire contract into another makes no sense, mostly because each contract will have parts, for example pricing, that don’t apply to the others, but I think more nuance is required here. It strikes me as unreasonable and mind-numbingly mechanistic to have to reproduce a volume of clauses from one of a related series of contracts in each of them. If you identify specific clauses (e.g. sections x, y, and z through ω of Contract K apply to this agreement [with the following modifications:]), what’s wrong with that?
There’s nothing wrong with that, except that as discuss in the post I link to at the end, I’d say the provisions in the other contract are “part of” this contract. And you might have to explain differences in parties, unless you’re willing to say something like “with all necessary conforming changes.”
Hmmm. So you’re saying that “form part of this contract” is OK unless you’re referring to an entire contract?
I’m saying be specific about exactly what’s going on.