When you are in the process of drafting a commercial contract, there are ways to accrue additional benefits to your cause. These ways can include the insertion of certain language. Sometimes, that additional language can be as simple as a single “magic” word. The insertion of just one extra word can make the enforcement of a contract provision (like a forum selection cause) mandatory and go a long way in ensuring that any disputes will be litigated in the place that you prefer. Whether you are negotiating, drafting, or litigating a commercial contract, be sure you are relying on a skilled South Florida commercial contracts lawyer to protect your interests.
In terms of a forum selection clause, the magic word is “exclusively,” as a recent dispute between a business and its investors illustrated. The business in that case operated within one of the bigger growth industries in this country – recreational marijuana. With each of its investors, the business signed a subscription agreement that contained a provision stating that all disputes would be litigated either in the federal court for the Central District of California or else the California Superior Court in Orange County.
Apparently having grown dissatisfied, several investors sued the company in Orange County. The investors, however, sued in Orlando, not Santa Ana. The business fought back by filing a motion asking the judge in Florida to either dismiss the case or transfer it to California.
Magic words exist in many areas of the law and they can give you a substantial “leg up” in your case. For example, if your goal is to obtain an uncontested divorce in a “no-fault” divorce state like Florida, the magic words you need to plead are that your marriage is “irretrievably broken.”
There are magic words in contract law, too. If the forum selection clause in your commercial contract uses the magic word “exclusively,” then that means that enforcement of the forum selection clause is mandatory. If you don’t, then it is discretionary, meaning that it’s up to the judge to decide where the best place is to litigate the case.
A mandatory forum selection clause must be enforced except in extreme cases
If it’s mandatory, though, the judge is required to enforce the clause unless it is “unreasonable or unjust.” Here in Florida, a mandatory forum selection clause generally will only be adjudged unreasonable or unjust if it creates such a profound burden on the party seeking to avoid the clause that it effectively would amount to a denial of that party’s “day in court.”
In the case of these cannabis investors, being forced to litigate in Orange County, California as opposed to Orange County, Florida would not be so incredibly burdensome as to effectively deny them their day in court. That meant the clause was not unreasonable or unjust, that it must be enforced, and that the dispute must be litigated in California.
You inevitably put much time, thought, and effort into negotiating the terms of your commercial contract so, when there’s a dispute, make sure you have the legal representation you need to receive the benefit of those terms. Count on the experienced South Florida commercial contracts attorneys at Stok Kon + Braverman to be the powerful advocate you need to protect your business’s interests and get you the outcome you deserve.
Contact us online or by calling (954) 237-1777 to schedule your consultation.