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Two Little Words: How Even a Single Word Pair Can Make All the Difference in Your Florida Forum Selection Clause

magnifying glassIn any commercial contract litigation case, the difference between success and defeat can be as small as a single word or word pair. That’s why it is so important to work with experienced Florida commercial litigation attorneys. It is vital to the protection of your business interests to make sure that each and every term of your commercial contract is carefully and fully negotiated after it has been assessed and approved by you and your knowledgeable attorney. In one recent case from Miami, the key to the case was one pair of words within one clause of the document.

In this case, the underlying contract that led to this lawsuit was a licensing agreement. Within the final version of the licensing agreement that the parties signed was a mandatory forum selection clause. Forum selection clauses can be helpful provisions within commercial contracts, potentially helping the parties avoid facing litigation in some far-flung location.

The mandatory forum selection clause in this agreement said that any “action or proceeding between Licensor and Licensee relating to this Agreement, whether pertaining to the interpretation or enforceability hereof or others, may only be brought in the courts of the State of New York, county of New York or the federal courts located therein, and both parties consent to the exclusive jurisdiction of such courts.”

Problems developed within the business relationship and the licensee decided to sue the licensor. The licensee chose to sue in Florida state court, specifically filing in Miami. The licensor, of course, sought to throw out the action as barred by the forum selection clause contained in the agreement. The licensee’s position was that certain claims it made, including aiding and abetting, civil conspiracy, and misappropriation of trade secrets, were not governed by the forum selection clause, and, therefore, the licensee wasn’t barred from suing outside the locations designated by the document.

The appeals court sided with the licensor. The key was the use of the “relating to” wording in the forum selection clause. In some forum selection clauses, the wording would say “arising out of” instead of “relating to.” “Arising out of” has narrower coverage than “relating to,” the court explained, which would mean that such a clause would have narrower coverage and allow for a broader range of lawsuits outside New York. This standard applies to various types of clauses, including both arbitration provisions and forum selection clauses.

Since this licensor and licensee chose to insert the “relating to” language, rather than the “arising out of” wording, that meant that their agreement had a broader forum selection clause, and that made the difference in this case. With “relating to” language, a claim must only have a “significant and clear” linkage to the agreement in order to be covered by the clause. By this standard, the clause’s coverage encompassed the claims brought by the licensee, which meant that the licensee was contractually bound to bring them in New York and could not proceed in Florida.

A well-known idiom states that the “devil is in the details.” For your commercial contract, the key to obtaining an agreement that truly works for your business is often in the details. For advice and representation upon which you can rely regarding your commercial contract, talk to the skilled South Florida business litigation attorneys at Stok Folk + Kon. Our attorneys have been helping businesses in South Florida and around the state negotiate beneficial agreements and, when necessary, defend those agreements’ terms in court. Find out how our team can help you.

Contact us online or by calling (305) 935-4440 to schedule your consultation and find out how this firm can help you protect your interests.

More blog posts:

The Impact of an Arbitration Clause on Your Florida Real Estate Litigation, Florida Business Lawyers Blog, June 30, 2017

Forum Selection Clauses and Their Impact on Your Commercial Contracts, Florida Business Lawyers Blog, March 24, 2017