Forum Selection Clause

Forum Selection Clause

A forum selection clause is a provision in a contract that designates the specific jurisdiction or venue where any disputes arising from the contract will be resolved. This clause is critical in establishing the location of legal proceedings, thus providing clarity and predictability for the parties involved.

The purpose of a forum selection clause is to minimize uncertainty and potential costs associated with litigation by agreeing in advance on a suitable location for dispute resolution. Typically, these clauses can indicate either a specific court or a geographic location. For example, a company based in New York may include a forum selection clause stating that any legal actions must be taken in New York County, regardless of where the parties to the contract are located.

There are generally two types of forum selection clauses: exclusive and non-exclusive. An exclusive forum selection clause requires the parties to resolve their disputes only in the specified forum, while a non-exclusive forum selection clause allows disputes to be brought in the specified forum or in any other forum that may have jurisdiction.

In practice, courts generally uphold forum selection clauses as long as they are reasonable and not deemed unfair or unjust. For instance, if a consumer from California enters into a contract with a company based in Texas that includes a forum selection clause mandating Texas courts for dispute resolution, the California consumer may be required to litigate in Texas, provided the clause is enforceable.