Forum (Venue) Selection Clauses are parts of a contract that allow the seller to choose where, and sometimes how, a lawsuit will be heard. People are allowed to bring a case to any court with which they have a connection, such as residency. Because companies are often large, they have a variety of different courts to choose from. Each court applies different laws, depending on which state they are in, and companies like to choose a court in which they are most likely to win. The location of the lawsuit is important because it may difficult or expensive for a buyer to get there. A forum selection clause can also determine how a problem will be handled. Often, a company will require arbitration to solve any issues.
Forum Selection Clauses are found in many different contracts, including admission tickets, promotional contests, and employment contracts.
Forum Selection Clauses are different from choice of law clauses because a court does not have to use the laws of its own state. Much like with venues, businesses can determine which laws they want to use, as well as where they want to use them. In this way, a business could apply the laws of one state while the actual trial is in another.
Example: Freddy bought a ticket for an Alaskan cruise. On the ticket, there was a forum selection clause that required all problems to be handled in Florida. Freddy lives in California. He was hurt on the cruise and wanted to sue; however, his medical bills were only $200. The cost of travel and housing in Florida during the suit, not including court fees, was more than $1,000. Therefore, Freddy decided not to sue and had to pay his medical bills himself.
Sample Provision – Cell Phone Company:
The parties hereto agree that all actions or proceedings arising in connection with this Agreement shall be tried and litigated exclusively in the State and Federal courts located in the County of San Francisco, State of California. The aforementioned choice of venue is intended by the parties to be mandatory and not permissive in nature, thereby precluding the possibility of litigation between the parties with respect to or arising out of this Agreement in any jurisdiction other than that specified in this paragraph. Each party hereby waives any right it may have to assert the doctrine of forum non conveniens or similar doctrine or to object to venue with respect to any proceeding brought in accordance with this paragraph, and stipulates that the State and Federal courts located in the County of San Francisco, State of California shall have in personam jurisdiction and venue over each of them for the purpose of litigating any dispute, controversy, or proceeding arising out of or related to this Agreement.