Choice of Venue Clauses Can Help You Enforce Your Contracts
When you draft or review your business contracts, you may give a lot of thought about what you will be able to litigate in court—in other words, what your rights are under the contract, what your (and the other party’s) rights are, what your duties and obligations are, and possibly, what the potential damages would be in the event of a breach. But have you given thought to where any lawsuit would be filed?
Venue Provisions
Venue provisions (or forum selection clauses) in contracts can provide some level of security for your business, and save your business significant costs if you need to enforce a contractual agreement.
Assume you’re a Florida business contracting with a contractor or supplier in, say, Michigan. If that company breaches the contract, where should the lawsuit be filed?
Without a venue provision, there is a chance that your lawsuit might have to be filed in Michigan, where the Defendant resides (or where the Michigan company is headquartered, or does business). You could be forced into travelling (and paying related expenses) to Michigan for hearings, depositions, or mediations, and having to hire an attorney licensed in Michigan who you may not know or be familiar with.
Forum Selection Clauses
But you can include in your business contracts language which requires that any lawsuit filed to enforce the terms of the agreement be filed in a country, state, or court jurisdiction that is convenient for you. These are called choice of forum or choice of venue provisions. They are often overlooked, and included as boilerplate language, but they can be very important.
As a general rule, courts will enforce venue provision clauses, so long as they are written in mandatory language. Saying a lawsuit “can” or “may” be filed in Florida is permissive. Even just saying that parties are “subject to the courts of Florida,” can be construed as being permissive. Saying that jurisdiction “is only proper in,” or “must be filed in” Florida is more likely to be construed as mandatory, making the venue provision enforceable.
So long as the provision is mandatory, your venue provision can be as specific as you like. For example, you can say that a lawsuit is only proper in “Florida,” in “Palm Beach County,” or in “the 15th Judicial Circuit.”
Choice of Law
Be aware that a choice of venue clause, which says where the lawsuit will be filed, is different than a choice of law provision. In our example, even if you had a choice of venue provision that required that the lawsuit be filed here in Florida, what law will the Florida court apply? Florida’s or Michigan’s?
This is why your business contracts should also include language that says what law will be applied, along with a valid and enforceable venue provision.
We can help you enforce your business agreements, or defend you against anyone making a claim against you or your company. Let our West Palm Beach commercial litigation lawyers at Pike & Lustig, LLP, help you. Call us at 561-291-8298 to get a consultation.
Resource:
corpgov.law.harvard.edu/2017/09/18/making-sure-your-choice-of-law-clause-chooses-all-of-the-laws-of-the-chosen-jurisdiction/
https://www.turnpikelaw.com/liquidated-damages-can-help-if-you-cant-determine-actual-damages/
