While no in-house attorney drafting a business contract wants to focus on being in litigation with her business partner, as I discussed in a 2013 blog post, thinking like a litigator at the drafting stage is critical in order to avoid potential surprises. A good example of this comes in the context of crafting a forum selection clause that truly achieves your objectives.
One typical version of a forum selection clause says the following:
Any claim for breach of this Agreement must be brought solely and exclusively in the Commonwealth of Massachusetts and suit may not be brought in any other jurisdiction.
While this might seem like very tight language (and it is), will this really preclude your business partner from suing your company in another state if the deal goes bad? Not necessarily. Indeed, even if the gravamen of a dispute is the failure of a party to fulfill its contractual obligations, nothing mandates that an opposing party sue for breach of contract. Perhaps there also are viable legal theories based on a breach of the covenant of good faith and fair dealing, fraud or some statutory violation.
As the First Circuit held in Rivera v. Centro Medico de Turabo, Inc., “it is the language of the forum selection clause itself that determines which claims fall within its scope.”
As such, if the above forum selection clause were applicable and a crafty litigator filed suit in Montana based on a legal theory other than a breach of contract, a motion to dismiss or transfer the case to Massachusetts based on the forum selection clause would be destined to fail. Thus, if you really want to ensure that all suits between your company and your business partner be brought in Massachusetts say so:
Any claims between the parties to this Agreement must be brought solely and exclusively in the Commonwealth of Massachusetts and suit may not be brought in any other jurisdiction.
Failing to use such plain and unambiguous language could leave you defending a claim far from home.