Here in the Golden State, generally speaking, freedom of contract is the rule. This is particularly true for business-to-business contracts. One of the various issues that can be negotiated, agreed and included in a business contract is a “choice-of-venue” clause. A choice-of-venue clause identifies where the parties agree to hold any judicial or arbitration proceeding. For example, the parties might agree that the venue will be San Diego (as opposed to San Francisco). An example of a simple choice-of-venue clause might read something like this:
“Choice-of-Venue; Exclusive Venue. The Parties to this Agreement hereby agree, consent and stipulate that the exclusive VENUE of any proceeding (whether judicial, arbitration or other) under this Agreement shall be San Diego, California.”
California courts will enforce such clauses, particularly when the clause is subject to actual negotiation between sophisticated parties. If a clause like this is located in a consumer contract, courts will be more exacting in evaluating whether the consumer had meaningful notice of the venue choice. As usual, conspicuousness is the watchword.
There are several reasons why your business might want to include choice-of-venue clauses in your contracts.
- First, there is the matter of convenience. Obviously, having to attend court or arbitration locally in — likely — downtown San Diego is much easier than having to drive a long distance or fly to another city.
- Second, what is convenient is also a cost-savings. Even if the proceeding will be an all-day proceeding, there is no excessive cost for travel or overnight lodgings. There is also costs savings by virtue of employee time. While most of the day might be lost to the proceedings, maybe still some work is accomplished.
- Third, additional cost savings may be accomplished through the retaining of your trusted and experienced San Diego corporate attorney. If you already have an attorney where the contract venue is, then you may not need to go out and find a new attorney to defend your case.
- Fourth, the court/arbitration procedures can be very different depending on the venue, particularly if the contract is international. The difference between a court proceeding in San Diego and San Francisco is probably not too great. However, that cannot be said for a proceeding here in San Diego verses a proceeding in Mexico City, Dubai or New Delhi. Choice-of-venue clauses are very common and very important in contracts involving parties from different countries.
- Fifth, sometimes venue impacts reliability of the decision-makers. This is particularly important with highly technical proceedings. An example here might be a patent proceeding.
Some jurisdictions have become known for having specialized courts, judges, and arbitrators. As such, the parties will agree to a venue where the courts/arbitrators have a reputation for excellence. The converse is also true; sometimes choice-of-venue is used to avoid jurisdictions that have a “bad” reputation. A common example here is a city/county with a reputation for juries awarding large verdicts in personal injury cases. Some plaintiff’s attorneys in personal injury cases will seek to file their cases in such cities/counties. By contrast, businesses want to have their cases heard in locations where juries are not as favorable to personal injury plaintiffs.
As can be seen, choice-of-venue clauses can be very important. An experienced San Diego corporate attorney can provide advice and counsel with respect to adding such clauses to your business contracts.
Contact San Diego Corporate Law Today
For more information, contact attorney Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard can be reached at (858) 483-9200 or via email. Mr. Leonard provides a full panoply of legal services for businesses including formation of corporate entities of all types. Like us on Facebook.