When defending a client against a breach of contract claim, the first questions to ask are whether the purported contract existed in the first place and whether the allegedly breached terms were part of that contract. At the outset, note that it is not always clear cut as to whether there was a signed document containing all terms. One particularly contentious area of the law is whether terms in another document (or texts, or verbal exchanges) were validly incorporated into the contract. It is common practice for a contract to refer to outside documents that set forth additional terms, however, claims for breach of such supplemental terms must be viewed with a keen eye as to whether all necessary steps were taken to incorporate such information into the contract.
When analyzing whether a contract validly incorporates external terms, there are two steps: first, determine whether a contract was formed, and second, were the terms it purports to include from other sources validly incorporated.
With respect to the first question, contract formation requires an offer, acceptance and an exchange of consideration. See, e.g., Moro v. State of Oregon, 357 Or 167, 196, 351 P3d 1 (2015). The parties must manifest mutual assent to the exchange, which may be expressed through words or inferred from the actions of the parties. See Homestyle Direct, LLC v. DHS, 354 Or 253, 262, 311 P3d 487 (2013). “Consideration is defined as some right, interest, profit or benefit or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other.” Id. quoting Shelley v. Portland Tug & Barge Co., 158 Or 377, 387, 76 P2d 477 (1938) (internal quotations omitted).
Oregon applies an objective theory of contracts in determining whether a contract was formed. See State v. Heisser, 350 Or 12, 25-26, 249 P3d 113 (2011). In such an analysis, the parties’ undisclosed intents and ideas are irrelevant; their overt acts and communications matter. Id. at 25; see also Wieck v. Hostetter, 274 Or App 457, 471-72, 326 P3d 254 (2015). Stated another way, if the parties “manifested assent” to agree through their words or conduct, then a contract was formed “regardless of subjective intent.” See Wieck, 274 Or App at 472 citing Kabil Developments Corp. v. Mignot, 279 Or 151, 157, 566 P2d 505 (1977). Whether a contract was formed is determined by reference to whether a “reasonable person” would believe that the objective conduct of the parties manifested assent to the contract. See, e.g., Wooton v. Viking Distr. Co., Inc., 136 Or App 56, 59, 899 P2d 1219 (1995). If there was no contract from which to begin, it may not be necessary to analyze whether terms were incorporated from another writing because there is no valid agreement into which any supplemental terms could be incorporated.
When a breach of contract claim alleges breach of a term incorporated from some other source, it may be important to push back on whether that incorporation was valid. In making this determination, Oregon courts have considered a wide range of factors including, but not limited to, whether the original contract was signed, whether the party incorporating the additional terms provided the other party with a copy of those terms, and what language was used in the contract to incorporate additional terms. Of course, this is not an exhaustive list.
If the original contract document was unsigned, there is a strong argument under Oregon law that the terms to which it refers in other documents are not validly included in the contract terms. Oregon cases hold, in the context of signed contracts, that where a written instrument refers specifically to another writing, the other writing becomes part of the contract. See Northwestern Pacific Indem. Co. v. Junction City Water Control, Dist., 296 Or. 365, 677 P.2d 671 (1984); see also Hous. Auth. v. Gates, 246 Or. App. 521, 267 P.3d 169 (Or. App. 2011). In Northwestern Pacific, the Oregon Supreme Court considered whether indemnity provisions that the plaintiff relied upon in its claim against the defendant were validly incorporated into a signed construction permit. In that case, it was undisputed that the permit “was signed by (the) defendant by signature of its Manager, Taylor.” Northwestern Pacific, 296 Or. at 373. Thus, only if the agreement (permit) was signed would the defendant be bound by terms that it either failed to read or misunderstood. Similarly, in Hous. Auth., 246. Or. App. at 521, the Oregon appellate court enforced separate occupancy rules that were specifically referred to in an apartment lease agreement. In that case, the plaintiff introduced evidence that the defendant signed both the apartment lease and the occupancy rules it sought to enforce. Id. at 524. Accordingly, if the original contract was unsigned and assent was allegedly manifested by some means other than a signature, there may be a strong argument that any terms that agreement purports to incorporate were not validly incorporated. If terms were not validly incorporated, then any claims for breach of those terms would fail as a matter of law and a Motion for Summary Judgment could be the best litigation strategy for such claims.
Another factor to consider is whether there is a competing form that was signed or otherwise assented to that provided terms and conditions for an agreement. If there were multiple competing contracts or agreements governing a particular relationship, then it becomes murkier whether the parties truly assented to either one, or whether there was a “meeting of the minds” as to which form actually controls the relationship. This argument may be more difficult to make in a Motion for Summary Judgment because it could lead to questions of fact related to which document was agreed to and when, how the parties manifested their assent, and whether the assenting parties had authority to bind the contracting entities. Although competing forms may be a strong factor in showing that no singular document ever formed a contract, this argument should be raised with caution because it could provide a judge an opening to declare that one of these questions of fact undermines the Motion.
When moving for summary judgment on the basis that no contract was formed or a contract failed to validly incorporate terms from other writings, it is significant to look at the totality of the circumstances and understand all the facts. It is critical to distill the argument to utilize only undisputed facts. This is an area in which judges seem reticent to dismiss a claim on summary judgment if the parties quibble about the factual details of exchanges leading to contract formation. Some clear-cut areas on which to focus include: the incorporation language used in the contract; whether the contract was signed; and whether a party was presented with a copy of allegedly incorporated terms and conditions. The law surrounding contract formation is very case specific. A close examination of how the contract and any purported terms fulfills each element of contract formation may lead to discovery of arguments that allow for an early disposition of a case. Arguments undermining contract formation could also provide leverage in settlement negotiations by pointing out that the contract sought to be enforced is not ironclad. As a result, never accept at face value that a contract existed when defending a breach of contract claim.
 See Amity Internet, Inc. v. Consolidated Credit Counseling Service, Inc., 920 So.2d 1286 (Fla. Dist. Ct. App. 2006) (the Court held that a contract using the language “subject to” terms and conditions did not validly incorporate those terms and conditions. Further in finding terms were not validly incorporated, the Amity Court found it notable that a paper copy of the additional terms were not provided to the party allegedly bound by those terms).