Location, Location, Location


One provision often found at the end of a contract discusses jurisdiction, venue, and choice of law. It is one of those paragraphs that you probably skipped over and maybe  even called boilerplate. But, guess what, it could matter a whole lot if the parties get involved in a lawsuit.

First, let’s talk about jurisdiction. Jurisdiction looks at if a particular court can hear a certain case. Or do they have to pass and say a different court has to rule on it. Sometimes the parties will prefer a specific court does or does not hear the case.

For example, some cases can be brought in either state or federal court. If it is an intellectual property case, federal court may be favored. Federal courts, especially the Western District of Wisconsin, tend to move faster than state courts. That speed of resolution could be very important. Also, federal courts tend to hear more intellectual property cases, so the judges have more basic knowledge on the law. When spending several hundred dollars  (or more) an hour, not having to spend time and effort explaining basic concepts can save money and resources.

State courts, on the other hand, deal with their state’s law more often. Contract interpretation is controlled by state law. Therefore, if the dispute is going to hinge on the interpretation of contract language, in depth knowledge of state law may be preferred.

Jurisdiction ties into venue. This is the actual location of the court that will hear the suit. If there is a contract between a party in Wisconsin and a party in Alabama, the lawsuit may be able to take place in either location or maybe not. How can they tell? It depends on the facts of the relationship and usually an argument about which is the proper place. However, that argument and the associated expenses can be avoided by stating the venue and jurisdiction in the contract.

Another way of adding some certainty to the very uncertain world of litigation is specifying the choice of law.  Each state has control over its laws so state laws can vary, especially as it relates to contracts.  By stating that Wisconsin’s laws apply, you know as much as one can how a contract may be interpreted.  For example, although a non-compete may not be favored under Wisconsin law, it has a chance of being enforced, but if you have California law applied, be ready to kiss that non-compete good-bye.

Therefore, before your eyes gloss over and you say everything is fine with the terms, make sure you have checked if the contract calls out where a lawsuit must be filed and which laws apply.

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