In One Beacon v. Crowly Marine Services, the United States Court of Appeals for the Fifth Circuit recently held that maritime contracts may incorporate terms from a website by reference just as terms from paper documents are incorporated by reference.
The case involved a subcontractor’s employee who was injured while working on a barge and filed a personal injury suit against both the owner of the barge and the contractor. The barge owner sought to enforce the defense and indemnity provisions under the contractor’s insurance policy as an “additional insured”. The insurer denied coverage because the contractor failed to request that the insurance company add the barge owner as an “additional insured” under the contractor’s policy. The barge owner then filed a third party demand against the contractor alleging that the contractor was obligated to defend and indemnify the barge owner pursuant to the terms of a repair service order (“RSO”) that was issued after the parties entered into an oral contract for the relevant work. The RSO referenced and incorporated certain terms and conditions that were available on the barge owner’s website. The owner of the barge also asserted a breach of contract claim based on the contractor’s failure to name the barge owner as an “additional insured” to various insurance policies.
On appeal, the United States Court of Appeals for the Fifth Circuit held that the contract entered into by the barge owner and contractor consisted of both their oral agreement and the RSO incorporating the terms and conditions on the barge owner’s website. The Court explained that incorporation by reference is acceptable and enforceable in contract formation and the incorporated terms will bind the parties when the terms are readily accessible at all relevant times. The Court noted that the terms and conditions were “plainly and conspicuously” incorporated by both the repair service order for the work at issue, as well as in the parties’ service orders relating to prior repair service jobs.
DRAFTED SEPTEMBER 6, 2011