Forum Selection Clauses - An Argument for Their Use Case precedents and arguments on why forum selection clauses included in contracts should be legal and binding.

Essay by jermUniversity, Master'sA+, April 2002

download word file, 7 pages 4.1 1 reviews


"It is hereby agreed by and between ___ and ___ that all disputes and matters whatsoever arising under, in connection with or incident to this contract shall be litigated, if at all, in and before a Court located in the State of ____, USA, to the exclusion of the Courts of any other state of country. Further, venue shall be limited exclusively to the State Court listed herein for all claims other than claims as to which federal jurisdiction is exclusive." (Typical Forum Selection clause)

Today's economy is steadily becoming more and more world-based. Through the World Wide Web and more free trade laws, companies here in the United States can do business internationally with ease. However, with this expanded market base come potential hazards. If a company maintains a website that is accessible without limitation from anywhere in the world, is it considered soliciting business from all of those locations, and thus subject to the laws of each such location? Imagine the enormous barriers to this new world economy that definition could create.

One of the ways to alleviate this potential risk is to set forth forum selection clauses in any contracts. The choice of forum is governed by a set of conflict of law rules. Typically, the state that has the greatest governmental interest in a case will provide the governing law. A forum selection clause in a contract establishes in advance where any claims or disagreements about a contract should be litigated which thereby puts the onus on the consumer to understand the implications of being bound by the state suggested. A contract is determined to be unconscionable if it is oppressive in that the consumer has little or no bargaining power. To prove unconscionability, two factors must be proven, that of oppression and...