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Before You Sign: What Choice Of Venue Means For Your Business

Posted by Jeffrey Forbes on Jan 12, 2017 9:00:00 AM


BEFORE YOU SIGN Choice Of VEnue- Twitter.png

Lawsuits have become long and costly for many businesses.  The average civil case now takes about two years to go trial.  Pre-trial litigation issues can often extend the timeline for cases and make them more costly.  To this end, many businesses seek to preempt pre-trial litigation by entering into contracts that decide these issues in advance.  These preemptions however can take the form of standard language that only appears briefly at the end of contracts, causing companies to overlook them. 

Important Details At The End Of Contracts

Choice of Venue provisions often fit this description.  The law generally allows parties to contract as to the forum for any disputes between them.  On the one hand, this may mean agreements to arbitrate disputes.  On the other hand, it can mean choosing a specific state, county, or court to hear a case.  A company based out of Philadelphia, Pennsylvania would prefer to litigate issues in Philadelphia rather than California for the most part.

Choice Of Venue And Choice Of Law Provisions

Choice of Venue provisions differ from Choice of Law provisions, which also exist as form language in many contracts.  Venue decides where a lawsuit happens, whereas choice of law governs which law applies.  Parties can have a lawsuit that takes place in Pennsylvania under the laws of New Jersey, for example.  This can present complications due to judges applying laws with which they have little to no familiarity and can undo some of the predictability parties seek in agreeing to these provisions.


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Is There A Home Court Advantage?

Venue selection presents both opportunities and challenges for contracting parties.  Most parties want to litigate issues in their home venue.  This provides both convenience and something of a home court advantage.  Home venue litigation provides companies with convenience because expenses involved in litigation, including having employees take time and travel to submit to depositions and to testify, are much lower.  Companies can also take advantage of better familiarity with attorneys, judges, juries and procedural rules in their home base. 

But Weigh This Benefit Carefully

At the same time, companies must be careful about inadvertently causing cases to be heard in a jurisdiction where judges and juries are known to be unfriendly to their position.  Another potential downside to avoid is agreeing to jurisdiction in a venue with a lengthy docket and long trial wait times as this can increase the cost of litigation and delay outcomes of a case.

Parties also must be aware of the fact that while they consent to give a court personal jurisdiction over them, they cannot give a court that does not have it subject matter jurisdiction over a lawsuit.  Subject matter jurisdiction cannot be waived by the parties as it relates to a court’s ability to hear broad classes of cases rather than its ability to exercise authority over those involved in the lawsuits. READ MORE: Protect Yourself Against Copyright Infringement Lawsuits

Not Language To Be Taken Lightly

Ultimately, while its easier to treat these type of agreements as filler, they can have significant effects on several important aspects of potential lawsuits.  Therefore, companies should take the time to know what they’re agreeing to when they sign these deals.

Topics: For Your Business, startup, Contracts