What is a Contract Venue Clause and Why is it Important to Me?

Mary Levine - Bradenton Attorney

Mary Fabre LeVine, Esq.
Business Litigation

Oftentimes people sign contracts without thoroughly reading the fine print, where important clauses like those involving venue can be found.  What is “venue”? It is the geographical location, i.e. city, county and state which may exercise jurisdiction over the parties and their dispute, and is where a lawsuit may be brought.  Jurisdiction means the Court which may decide a parties’ dispute, and render a judgment or decision which is legally binding and enforceable on them. While there are laws governing certain types of disputes, for example, real property litigation occurs where the property is located, parties can, and usually do, include venue clauses in every contract.

Why does the Court location matter? Venue clauses are important because they give leverage to the party who chooses the location of the Court where the dispute over contract terms will be decided. Oftentimes, a party will want their contract dispute decided by the Courts in their hometown, where they and their counsel are located.  The local courts offer clients and their counsel the further advantage of familiarity with the law, the judges, and approach taken in a particular circuit of jurisdiction.

Florida law recognizes the rights of contracting parties to agree on the law to be applied to their disputes and the forum or Court in which the dispute may be heard.  Usually, the venue selected must have some relation to the parties and their contract. It may be where the home offices for a company are located, as companies are generally to be sued where their principal office is located.

When you are presented with a contract, it is important to review the venue clause and ask your lawyer to review the terms to protect your interests before you sign. Planned venue selection when a contract is being prepared, is the time to choose your local Courts to plan ahead to reduce potential litigation costs, and provide advantages over an adversary.

Once the contract is made, the venue issue is decided. Therefore, at the beginning of a lawsuit, it is not uncommon for the parties to aggressively litigate the venue issue to secure the venue and court which is most favorable and convenient for a particular party.  As companies contract with others from different areas, states or countries, this issue becomes more important as a front end risk management planning tool when the contract is being prepared.

American courts are usually presented with venue clauses which are either mandatory or permissive. The Courts are generally bound to, and do uphold those venue clauses which they find to be mandatory.  Mandatory venue clauses require that the particular court selected and located in a specific city, and/or county is the exclusive court or only Court to decide the dispute. The use of the words ‘exclusive’ and ‘shall’ are often the hallmarks of a mandatory venue clause.

Permissive venue clauses on the other hand use words such as ‘may’ rather than the more limiting terms ‘exclusive’ and/or  ‘shall.’ Where a venue clause is found by the Courts to be permissive, the Courts generally hold that such Courts may have jurisdiction to decide the dispute. Generally speaking permissive clauses provide the parties may choose between one or another Court to decide their dispute.

Mary LeVine is a principal in the Blalock Walters Litigation Group, and can be reached at mlevine@blalockwalters.com.