Forum selection clause
A forum selection clause sets where disputes under a contract must be brought, such as a particular state, county, or court.
What it means
A forum selection clause, also called a jurisdiction or venue clause, decides where lawsuits about the contract must be filed. It might name a state, a county, a city, or specific courts. It is separate from the governing law clause, which picks the law that applies.
Clauses can be exclusive or non-exclusive. An exclusive clause means cases can only go to the named courts. A non-exclusive clause means the parties accept those courts, but a case can still be filed somewhere else.
The practical effect is cost. A graphic designer in Oregon owed $8,000 by a client whose contract requires suits in New York may need a New York lawyer and trips across the country to collect. That can make small claims not worth pursuing, which is often the point for the party that wrote the clause.
US courts generally enforce forum selection clauses in business contracts. Some states limit them in certain kinds of contracts, such as construction, franchise, employment, or consumer agreements, so the rules vary.
What to watch for
- Check whether the clause is exclusive or non-exclusive.
- Note the location and estimate what it would cost you to bring or defend a case there.
- See whether it names state courts, federal courts, or both.
- Check whether small claims court or requests for urgent injunctions are carved out and can be brought elsewhere.
- Make sure it does not conflict with an arbitration clause in the same contract.
Example clause
Each party irrevocably submits to the exclusive jurisdiction of the state and federal courts located in New Castle County, Delaware, for any action arising out of or relating to this Agreement, and waives any objection to venue in those courts.
Any lawsuit about this contract must be filed in Delaware, even if you are based somewhere else.