Many of you do business with people and entities in other states or countries. Not surprisingly, then, I am often asked to address the "what if" situation of where a lawsuit will or could take place if something goes wrong between you and the other party. The legal term for where a lawsuit takes place is "venue."
There are a lot of factors that go into determining where the venue of a particular lawsuit will be and since we cannot always know on day one what might happen many years from now between the parties or what their particular lawsuit may be about, we can forge an agreement on the subject of venue.
A forum selection clause, as it is called, allows the parties to a contract or business relationship to agree that a dispute arising out of their relationship will be resolved in a particular place. The parties can agree to state or federal court or even arbitration.
The one restriction: the venue agreed to has to bear some relation to the parties' dealings. For instance, if you are in Miami and the other party is selling you widgets out of Houston, you cannot agree to have any future dispute heard by the courts in Ohio. You can, however, choose the state or federal courts of Florida or Texas and even agree to the specific county or city in which any lawsuit would have to be filed. Again, the selection of the county or city has to bear some reasonable relationship to the parties' locations and business transactions.
The law of the several states deems forum selection clauses presumptively valid and will enforce them. Having one in place when you start a business relationship provides you with a level of predictability as to where you would be likely to handle and resolve any future dispute or litigation.
Have a great week. P.S. - if anyone wants me to post information about any particularly good Haiti relief efforts that could use our help, please let me know and I will be happy to include it in tomorrow's postings.
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