June 09, 2017
The Basics of the Forum Selection Clause
Signing to a new job, project, obtaining a new client or deal is an exciting time that is often under time constraints… and scrutiny. While it can be very tempting to skim the contract to make sure the decimal point is in the right spot, you should take the time to read over and understand a contract before scribbling your John Hancock on the dotted line.
Contracts are meant to be an outline of the details and expectations of the deal as a whole. They are also meant to make sure everyone is on the same page about what is required at every step. Recent litigations have been seeing quite a lot of dispute when it comes to the forum selection clause. Below are the basics of what you should know but, of course, you may want to consider having it looked over by an attorney.
The Forum Selection Clause
A contract with a conflict of laws element allows the parties to agree that any litigation resulting will be initiated in a specific forum. Missouri law enforces forum selection clauses unless they are unreasonable in their application. There are three types of clauses:
- the reference is to a particular court in a jurisdiction agreed upon by the parties
- the clause is referring to a specific kind of dispute resolution process, like mediation, arbitration or a hearing before a special referee (judge)
- the clause is referring to a combination of the above approaches, requiring a specific process to be carried out in a certain location
Why is This Clause Important?
It determines where a contract dispute case needs to be filed. If a business in another state or country violates the contract, you may have agreed to proceed with litigation (therefore filing) in their location and not yours.