AIA Additions and Deletions Report May Be More Important Than You Think

The parol evidence rule is a substantive common-law rule that prevents a party to an integrated (complete) written contract from presenting extrinsic evidence that contradicts or adds to the written terms of the contract unless one of a handful of narrow exceptions applies. The rule means that one cannot use evidence of prior negotiations to alter the terms of an integrated (complete) written contract.

The American Institute of Architect’s (“AIA”) proprietary software requires changes in the form agreement to be shown as redlined or strikethrough text, or as an Additions and Deletions Report appended to the end of the document. For example, if this blog article was a form document, and I decided to delete this sentence, it might appear like this in the AIA form documents. The purpose of this feature is so that the AIA form documents are not altered and then presented to an unknowing construction participant as a boilerplate form contract.

When parties negotiate an AIA contract, therefore, deleted provisions are either included as strikethrough language in the body of the contract or in an Additions and Deletions Report referenced in the body of the contract and sometimes attached to the final executed version of the contract. This raises a question: If a dispute arises, should a court give meaning to the boilerplate language struck through by the parties?

There is a split of authority on the issue of interpreting strikethrough language. In Gateway Frontier Props., Inc. v. Selner, Glaser, Komen, Berger & Galganski, P.C., 974 S.W.2d 566, 570 (Mo. Ct. App. 1998), for example, the Missouri Court of Appeals held that deleted language is extrinsic to the contract and should not be considered when interpreting an unambiguous, integrated contract. The court stated that this was the view in the majority of jurisdictions that have considered the issue.

On the other hand, in 2011, the Texas Supreme Court gave meaning to a provision that was struck through in connection with its interpretation of an insurance policy. In Houston Exploration Co. v. Wellington Underwriting Agencies, Ltd., 352 S.W.3d 462 (Tex. 2011), the court found that the striking of a policy provision that would have required indemnity for weather standby charges that an insured incurred as a result of delay in repairs to property damage due to severe storms indicated the parties’ intent that the charges weren’t covered.  The dissenting opinion argued that the rule created by the majority had the potential to create havoc:

“Imagine that an insurance company provided insurance through a form policy with the various types of coverage negotiable before execution. Two parties contract for identical coverage with this insurer, but one is provided a clean copy, containing only the language to which that party agreed. The other, meanwhile, receives a policy with the same operative language but with other language – coverage not contracted for – crossed out.  Under the regime proposed by [the Respondent], were both parties to sue on the contract, the interpretations might come out differently, even though each had negotiated the same coverage because the court in one case could look to the deleted language while the other could not. Such a rule would invite confusion rather than mitigate it.”

While this author could find no legal opinion analyzing the specific conflict created by the AIA software’s inclusion of strikethrough language, at least one Georgia court appears to have given meaning to strikethrough language contained in an AIA contract. In American Demolition, Inc. v. Hapeville Hotel Limited Partnership, 413 S.E.2d 749 (Ga. App. 1991), the court denied a contractor’s claim for damages relating to unforeseen underground conditions at a construction project. In so holding, the court noted that the original contract form contained a “concealed conditions” provision, which provided for an equitable adjustment of the contract price in the event that unusual conditions were encountered. The parties struck this provision from the contract. While the court’s reference to the original language is arguably dicta, because a contractor generally accepts the risk of unforeseen conditions absent contract terms to the contrary, it suggests that deleted language aided the court’s interpretation.

The takeaway – Before striking language in an AIA contract form, parties must understand that a court could interpret the removal to have meaning if evidence of its deletion remains in the contract. Parties to an AIA contract should think twice before removing form language merely because they think it is unnecessary for the size of the project, or because conditions that might trigger the removed language are unlikely to occur, or because the contract form is simply too long. Remember, removing language in a contract could have unintended consequences if a court decides to give meaning to the deleted language.

For more information on this topic, contact your Construction Law Counsel at Smith, Gambrell & Russell.

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