Admit it! You have checked the box next to the Terms and Conditions when making a purchase or signing a contract and never actually look at the terms and conditions a million times. We have all signed contracts without reviewing each paragraph, often just focusing on what it’s going to cost us and how long the contract will take to complete. With the trend of signing contracts electronically increasing in popularity, it becomes even easier to miss important portions of the contract. When it comes to contract terms, there are a few very important terms that you should make sure to review before signing any contract and that is the choice of law/forum selection provision that most contracts contain. In addition to the choice of law/forum selection provisions in contracts, recently some contracts also contain a jury waiver. This can especially be dangerous depending on the type of case you have. If a contract is completed without any hiccup, these provisions never come into play. However, if you run into trouble during the completion of a contract, these provisions can make all the difference in the world.
Choice of Law Clause
Most contracts contain a choice of law provision usually near the end of the contract. A choice of law clause allows the parties to a contract to choose the substantive law of a certain state to apply to the contract. This would allow the parties to choose Texas substantive law even if the matter is adjudicated in another jurisdiction. While courts generally abide by parties’ bargained for and expressed choice of which state’s laws govern the performance of a contract, the contracting parties’ freedom to choose what state’s law applies is not unlimited. Parties cannot require that their contract be governed by the law of a jurisdiction which has no relation to them or their agreement.
Choice of Forum Clause
The choice of forum clause allows the parties to select the particular state or jurisdiction where adjudication will take place, if necessary. Often times the choice of law and the choice of forum provisions are contained in the same paragraph or section of the contract. Courts generally allow the parties to contract for both of these clauses. This clause could affect the cost of litigation should the parties’ contract contain a location where the neither of the contracting parties reside or conduct business.
Jury Waiver Clause
Some contracts now include a waiver of the jury trial should any issue involving the contract need to be litigated. Although the Texas Constitution states that the right of trial by jury shall remain inviolate, some contracts now contain a waiver of jury trial usually found near the end of the contract. Contractual jury waivers are enforceable, but they must be found to be a voluntary, knowing and intelligent act that was done with sufficient awareness of the relevant circumstances and likely consequences. If the jury waiver language is conspicuous, it will be presumed that it was contracted to knowingly, intelligently and voluntarily. The waiver language is conspicuous if it is “so written, displayed or presented that a reasonable person against which it is to operate ought to have noticed it.”
Each of these clauses can have important implications both financial and legal. Choice of law and choice of forum clauses could end up costing significant amounts of money depending on the type of contract signed and the resulting disputes over those contracts. Some jurisdictions have regulations that are more favorable to companies than individuals while some jurisdictions may offer the contract drafter a “home team” advantage over the contractor signer. The jury waiver clause can also have very important legal consequences if left unchecked when signing a contract. There are some cases that you would want a jury to hear more than others. It is important not to give this right away before you even know whether or not litigation may become necessary.
