Once a lawsuit is filed to collect on an outstanding debt, a number of factors that were not present prior to the filing of a lawsuit become serious impacting factors on the outcome of the case and ultimately the collection of the debt. Such factors include the costs of witness travel and hiring local counsel to litigate in distant locales.
These two factors are easily eliminated by a properly drafted forum selection clause. A forum selection clause is a contractual provision, whereby the parties to the contract agree that all future legal disputes between the parties will be litigated in a particular forum. Often such clauses are overlooked or left out of documents because no one expects a relationship to go south when it is first being formed. However, A valid forum selection clause offers a creditor not only the savings and comfort of litigating at “home,” but provides an additional pressure point on a debtor who may have to travel to defend.
For a legal analysis of the state of forum selection clauses in Pennsylvania, please click here.
2 thoughts on “Forum Selection Clauses – Controlling where you Litigate”
Shawn – can you explain the difference between “forum selection” and “choice of law?”
Great question, Bob. A forum selection clause determines where the “fight” is going to take place. Whereas, a choice of law clause determines the rules, i.e. the law, that will govern the “fight.” It is important to remember that just because the forum selection clause requires that litigation take place in a Pennsylvania court, it doesnt necessarily mean that Pennsylvania law will govern even if the contract is silent as to the choice of law. Therefore, it is best practice to include a choice of law clause in your contracting documents whenever there is a forum selection clause. This works to make sure you get not only the locale you desire, but also the law you desire.