Forum Selection Clauses in Contracts

What is a forum selection clause?

Contracts and Forum Selection Clause

Contracts often contain a forum selection clause. The term “forum” means the place where any lawsuit about the contract must be filed.

Forum selection clauses work in two ways.

First, they identify the state in which the lawsuit must be filed. We call that a “location provision.”

Second, these clauses identify which court in the state must hear the case. We will refer to that as a “court provision.”

Location provisions.

In the absence of a forum selection clause, there are a number of laws and rules that determine where a lawsuit can be filed. Generally speaking, the defendant’s place of residence is the most common factor in making this decision.

Mississippi law, however, allows parties to agree that the lawsuit can be filed somewhere else. Though it sounds strange, in some situations, two Mississippi residents could agree that any lawsuit between them must be filed in a different state.

Location provisions can also identify the part of the state in which the case must be heard. For example, parties can choose to litigate in Hinds County, Mississippi, regardless of whether either of them lives there.

Court provisions.

Forum selection clause chose a  courthouse

Courthouse

In this type of provision, the parties agree that a particular court or group of courts must hear the lawsuit. They could, for example, agree that their contract dispute be resolved by a state court instead of a federal court. They could do the reverse as well.

The only significant limitation is that the parties cannot create subject matter jurisdiction by agreement. When a particular court has legal authority to hear a certain type of case, it is said to have subject matter jurisdiction.

Federal courts, for example, have jurisdiction to hear certain lawsuits between parties of different states. But, assume two Mississippi residents agree to that their dispute will be heard in federal court. Regardless of the agreement, the federal court will not hear the lawsuit if it does not have subject matter jurisdiction.

Your contract should contain a forum selection clause.

Such a clause is valuable when drafting a contract. It brings certainty to the question of where the parties will have to go to have a contract dispute resolved.

Assume you enter into a contract with another Mississippi resident, but the contract does not have a forum selection clause. Then, assume that person moves to another state.

In that situation, you might have to file suit in that other state. A forum selection clause, however, could establish that the lawsuit must only be brought in Mississippi.

If you are considering entering into a contract and need advice about a forum selection clause, contact the Panter Law Firm at 601-607-3156 for a consultation.

www.craigpanterlaw.com

Craig Painter