By A. Nicholas Falkides
Three contract clauses that can critically impact the outcome of contract dispute litigation are Jurisdiction, Venue and Attorneys’ Fees. Yet these clauses are often overlooked, and sometimes left out, as parties focus on “the deal terms” and ignore what they consider the “boilerplate.”
Jurisdiction is the authority of a particular court to bind a particular party [such as a person, a business, or a government agency] to the court’s judgment. Without jurisdiction an order or judgment rendered against a party is unenforceable, in some cases even after a jury trial.
Jurisdiction is important for several reasons. First, the law may differ from one jurisdiction to another. Second, the cost of litigating in another jurisdiction is often much higher than litigating in the party’s “home” jurisdiction. Third, a party may have a “home grown advantage” in its local jurisdiction that it loses in a foreign jurisdiction.
Venue is the geographical location where a lawsuit is, or can be, brought. Venue rules generally prevent a lawsuit from being brought in a location that has no connection to the parties or the dispute; and a lawsuit brought in the wrong venue is subject to involuntary transfer to a proper venue, or even dismissal.
Venue is important because it is usually more expensive, and more difficult, to litigate in a distant venue than it is in a nearby venue; and the cost difference often impacts a party’s litigation strategy.
An attorneys’ fees clause gives a party to a lawsuit – typically the prevailing party – the ability to recover its “reasonable” attorneys’ fees in the lawsuit. Attorneys’ fees clauses are legally enforceable in New York. While some New York courts refuse to enforce attorneys’ fees clauses on principle, their existence in a contract often gives a party leverage in settlement negotiations.