Choice of forum: Overview, definition and example
What is choice of forum?
Choice of forum refers to a clause in a contract that specifies which court or location will handle any legal disputes between the parties. It determines where lawsuits or arbitration proceedings will take place if disagreements arise, providing clarity and avoiding confusion about jurisdiction.
For example, a contract might state that any disputes must be resolved in the courts of California, regardless of where the parties are located.
Why is choice of forum important?
Choice of forum is important because it provides certainty about where disputes will be resolved, saving time and legal costs. Without it, disagreements over jurisdiction could add complexity to resolving a conflict.
For businesses, this clause is especially useful in contracts involving parties from different states or countries, ensuring the dispute resolution process happens in a preferred or neutral location.
Understanding choice of forum through an example
Imagine a tech company in New York signs a service agreement with a client in Texas. The contract includes a choice of forum clause stating that disputes will be resolved in New York courts. If a disagreement arises, both parties must resolve the issue in New York, even though the client is based in Texas.
In another example, a U.K.-based supplier contracts with a U.S. retailer and includes a choice of forum clause specifying that disputes will be handled in London courts. This ensures the supplier doesn’t have to navigate the complexities of the U.S. legal system if a conflict arises.
An example of a choice of forum clause
Here’s how a choice of forum clause might look in a contract:
“Any dispute arising out of or relating to this Agreement shall be resolved exclusively in the state and federal courts located in [State/City], and the Parties hereby consent to the jurisdiction of such courts.”
Conclusion
Choice of forum specifies where disputes under a contract will be resolved, providing clarity and reducing jurisdictional conflicts. It’s a practical way to streamline dispute resolution and protect parties from unexpected legal hassles.
By including a clear choice of forum clause, businesses can ensure predictability and control over the legal process, helping avoid unnecessary complications in resolving disputes.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.