Courts regularly are asked to compel arbitration based on an agreement that is part of a multi-party transaction involving multiple documents. In some cases, the documents are understood to be part of a “unitary” contract when they cross-reference each other and adopt terms from the others. For example, a primary contractor may require that subcontractors adhere to the terms and conditions of the primary contract, or a “master agreement” for a franchiser or dealer may be followed by individual transactional purchase orders and confirmations “under” the terms of the master agreement. A new employee may sign a separate arbitration agreement as part of her application or the on-boarding process. Such documents carefully define the parties and their roles, so arbitration required in one often is understood as part of the “deal.”

The Third Circuit this July refused to interpret an arbitration agreement between a doctor and one company to require dismissal of a lawsuit by the doctor against a related company, though, where the definitions of the parties could not be “stretched” to include the defendant seeking arbitration. As it said in a precedential opinion in Abdurahman v. Prospect CCMC LLC, __ F.4th ___, 2022 U.S. App. 20823 (3d Cir. July 28, 2022), the court need not solve the “riddle” posed by the drafter by deciding whether the problem was “[a] case of scrivener’s error, savvy separation or something in between.” Once again, the case provides a simple lesson all too often lost by otherwise sophisticated transactional counsel—watch your definitions. And avoid off-the -shelf, pre-existing, or “good enough” agreements (of any sort).

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