Parties to a contract can also include a forum selection clause identifying one or more courts in which they agree disputes between the parties will be litigated, should they arise at all. In state court practice, a forum would be a particular state.
Forum choice has very practical implications and parties should consider the following, and other factors, when deciding upon a forum:
1. Geographical convenience. If the parties are located in different states, it will invariably be cheaper and more convenient for one party and more expensive and complicated for the other to get to court to settle any disagreement.
2. There can be benefits to litigating in a forum that is well known to a party or attorney, for example familiarity with specific judges, the local rules, or the type of jury that will likely be selected.
3. Other forum idiosyncrasies, such as whether the forum is pro-environment, pro-plaintiff, or pro-business.
Forum selection clauses are generally considered valid and may be given effect in the absence of a showing that enforcement of the clause would be unreasonable/unconscionable/unjust, contrary to public policy, or forbidden by statute. The burden of demonstrating that the forum choice should not be enforced is placed on the party opposing enforcement and, historically, has been difficult to prove. Arguments that it will be more expensive to litigate in the selected forum, that the law of the selected forum may be unfavorable or even hostile to a party’s claims, that a party did not read the clause, or that the contract is an adhesion contracts have all been found insufficient. Courts have stated that enforcement may be unreasonable if the forum selected would be unavailable or unable to accomplish substantial justice.
So what’s the moral of the story? Choose your forum wisely, because you will likely be stuck with it!
If you would like assistance with drafting a contract or need advice regarding a dispute, contact the Law Offices of Darius T. Chan, P.C.
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