Conflicting Contract Terms? Your Order-of-Precedence Clause May Decide Where You Fight

Construction projects often involve multiple contract documents, including master agreements, purchase orders, and standard terms incorporated through website links. When those documents conflict, the provision establishing which document controls can determine whether a dispute belongs in court or arbitration.

In Clean Energy Services CES LLC v. GE Vernova International, LLC, a New York trial court permanently stayed an arbitration arising from wind-turbine replacement work. The parties’ master services agreement required unresolved disputes to proceed through litigation in designated New York courts. A later purchase order incorporated standard purchasing terms requiring arbitration.

The critical provision was the master agreement’s order-of-precedence clause. It stated that the master agreement would control over conflicting purchase-order terms unless the purchase order expressly stated that it was overriding or modifying the master agreement. The purchase order contained no such statement.

The court assumed that the contractor had accepted the purchase order and its incorporated terms. Even with that assumption, acceptance did not satisfy the express requirement for changing the master agreement. The arbitration provision therefore did not govern the dispute. The court decided only the forum issue; it did not determine responsibility for the turbine’s collapse or the claimed damages.

A later purchase order does not necessarily override a negotiated agreement simply because it was accepted electronically or the work was performed. The result depends on the language governing the relationship between the documents. This decision also does not mean that every court-selection clause defeats arbitration or that terms incorporated through hyperlinks are unenforceable.

Contractors, subcontractors, owners, and suppliers should:

• Establish a clear document hierarchy. Identify which agreement controls when purchase orders, proposals, specifications, or incorporated terms conflict.
• Make intended changes explicit. If a later document is intended to change dispute resolution or another negotiated obligation, identify the provision being modified and comply with the agreement’s amendment requirements.
• Review purchasing terms before acceptance. Electronic acknowledgments and linked terms can carry significant obligations. Personnel processing orders should know when legal review is needed.
• Check more than dispute resolution. Conflicting provisions concerning payment, indemnification, warranties, and liability limitations deserve the same attention.

A carefully drafted order-of-precedence clause can protect negotiated terms. Reviewing the entire contract package before work begins can help avoid an expensive preliminary fight over where the real dispute will be heard.

If you would like more information regarding this topic please contact Thomas S. Tripodianos at ttripodianos@wbgllp.com or call (914) 607-6440