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What is a Forum Selection Clause?

A forum selection clause is a clause added to a business agreement that restricts where a party may commence a lawsuit in the event of a dispute. For example, if party A resides in New Jersey and party B resides in New York, party A may request a forum selection clause (to be added to the contract between A and B) that states that in the event of any dispute that the courts of the State of New Jersey shall have sole and exclusive jurisdiction over the case. Adding this clause to the contract between A and B would be advantageous to A since any lawsuit (involving the contract between A and B) would be litigated in A's home state. When signing a business agreement, always pay attention to forum selection clauses and consider the additional costs and expenses that you may be required to incur by having to commence and/or defend against a lawsuit in another state.

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