For companies that do business across state or national lines, forum selection clauses are more than mere boilerplate or afterthought provisions to a business transaction. Forum selection clauses can reduce uncertainties in a business transaction and potentially obviate having to litigate in a foreign jurisdiction. Although the parties to a business transaction presumably will strive to faithfully perform their contractual obligations, disputes arising from the timing or quality of performance, interpretation of terms, or a multitude of potential other issues may nonetheless occur. Even if the parties attempt informally to resolve their disputes, the absence of a forum selection clause could create the proverbial \u201crace to the courthouse,\u201d fueled by each party\u2019s incentive to file a complaint (however premature) in that party\u2019s preferred jurisdiction to lock in home field advantage.<\/p>\n
For the out-of-state defendant who loses out on this race, the consequences of litigating in a foreign jurisdiction could be considerable. The defendant may need to hire local counsel, navigate unfamiliar rules and judges, and make travel arrangements for its officers, employees and agents to be deposed hundreds or even thousands of miles away. In view of these potential burdens, parties to a business transaction should seriously consider including a forum selection clause. A carefully drafted forum selection clause that designates the forum for any litigation arising from the contract would substantially reduce the uncertainty that promotes the \u201crace to the courthouse\u201d scenario described above. Indeed, both federal and state laws favor enforcing forum selection clauses to avoid disrupting the parties\u2019 agreed expectations. See, e.g., Atlantic Marine Constr. Co. v. United States District Court for the Western District of Texas,<\/em> 134 S. Ct. 568 (U.S. 2013); Tateosian v. Celebrity Cruise Servs., Ltd.<\/em>, 768 A.2d 1248, 1250 (R.I. 2001); Taylor v. E. Connection Operating, Inc.<\/em>, 988 N.E.2d 408, 410 (Mass. 2013).<\/p>\n A forum selection clause serves no purpose, however, if it is not enforceable. The party resisting enforcement of a forum selection clause carries a heavy burden to convince the court that it should not be enforced. Tateosian<\/em>, 768 A.2d at 1250. Although forum selection clauses are presumed to be valid, M\/S Bremen v. Zapata Off-Shore Co<\/em>., 407 U.S. 1, 9-10 (1972), they are subject to judicial scrutiny for fundamental fairness (i.e.<\/em>, reasonableness). Tateosian<\/em>, 768 A.2d at 1250. In determining whether a forum selection clause is reasonable (i.e., whether the court will enforce the forum selection clause or permit the litigation to proceed in the forum in which the plaintiff filed the lawsuit), courts in Rhode Island routinely analyze the following nine factors (in no order of importance):<\/p>\n \u2022 which state\u2019s law governs the contract; D\u2019Antuono v. CCH Computax Sys., Inc.,<\/em> 570 F. Supp. 708, 712 (D.R.I. 1983).<\/p>\n However, \u201c[w]hile each of these factors has some degree of relevance and some claim to weight, there are no hard-and-fast rules, no precise formulae.\u201d Id<\/em>. at 712. Because the question of reasonableness is a fact-laden inquiry, it is difficult to predict with certainty how a court would rule on the enforceability of any given forum selection clause.<\/p>\n Nevertheless, the following principle can be distilled from the cases: to be enforceable, a forum selection clause must be fundamentally fair and the designated forum must bear some connection to the parties and\/or the underlying transaction. Accordingly, a party should avoid overreaching by designating a desired forum that has no connection to the parties\u2019 transaction or the parties themselves. If the parties agree on a fair and reasonable forum that has some relation to themselves and\/or their transaction, the parties could avoid expensive, collateral litigation over which the court will adjudicate their dispute. Litigation can be time-consuming and expensive; a well-crafted forum selection clause can avoid fighting about where to fight.<\/p>\n","protected":false},"excerpt":{"rendered":" For companies that do business across state or national lines, forum selection clauses are more than mere boilerplate or afterthought provisions to a business transaction. Forum selection clauses can reduce uncertainties in a business transaction and potentially obviate having to litigate in…<\/p>\n","protected":false},"author":7,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[2],"tags":[31,5],"class_list":["post-82","post","type-post","status-publish","format-standard","hentry","category-business-law","tag-forum-selection-clauses","tag-rhode-island-business-law"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.apslaw.com\/its-your-business\/wp-json\/wp\/v2\/posts\/82","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.apslaw.com\/its-your-business\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.apslaw.com\/its-your-business\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.apslaw.com\/its-your-business\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/www.apslaw.com\/its-your-business\/wp-json\/wp\/v2\/comments?post=82"}],"version-history":[{"count":0,"href":"https:\/\/www.apslaw.com\/its-your-business\/wp-json\/wp\/v2\/posts\/82\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.apslaw.com\/its-your-business\/wp-json\/wp\/v2\/media?parent=82"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.apslaw.com\/its-your-business\/wp-json\/wp\/v2\/categories?post=82"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.apslaw.com\/its-your-business\/wp-json\/wp\/v2\/tags?post=82"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\n\u2022 where the contract was executed;
\n\u2022 where the contract is performed;
\n\u2022 availability of remedies in the forum designated by the forum selection clause;
\n\u2022 public policy of the state where the plaintiff filed;
\n\u2022 location of the parties, convenience of the prospective witnesses, and accessibility of evidence;
\n\u2022 comparative bargaining power of the parties and the circumstances surrounding their dealings;
\n\u2022 presence or absence of fraud, undue influence or other circumstances; and
\n\u2022 the conduct of the parties.<\/p>\n