Construction contracts, design services contracts, and for that matter most contracts typically contain a provision governing the location (venue) for litigation/arbitration/mediation of disputes arising out of or related to the contract. The terms relating to venue is often hidden in governing law provisions under the “Miscellaneous” terms.
What is Venue?
Venue is the geographical place and court where the lawsuit will be handled. Without a contract clause that establishes venue, the venue law allows an action to be brought in various locations: 1) the place of the defendant’s residence, or principal place of business; 2) the place where the cause of action accrued; or 3) where the property in litigation is located [§47.01 et seq., Fla. Stat. is the general venue law]. The party bringing the action gets to initially select the location because they are the party filing the action. However, if they file the action in an improper venue, a change of venue may be sought. Avoid waiving the right to enforce the venue selection provision in your contract.
Why Could Venue Matter?
If you do business with a subcontractor or supplier to whom you make payments, the suit may be filed at the place where payment is due, thus a subcontractor with its principal office in Atlanta, could file suit against you in Atlanta. This would be inconvenient to say the least, and could be quite costly. There are various reasons to assign the venue for litigation within your contract; included among them are expenses and costs for litigation.
A venue far from your or your attorneys would increase the time and expense related to the action. The party with whom you contract, or the property being improved may be quite far from your office or your attorney’s office. Also, preferences for venue may be based upon factors related to the court system, judges or the jury pool. Some courts are back-logged and litigation may take a longer time in that jurisdiction.
Venue Selection Clauses are Not Bullet-Proof
Although a well drafted mandatory venue selection provision is ordinarily enforced, in limited circumstances the courts may not enforce the venue provisions contained in your contact. The rule in Florida recognizes a free and voluntary choice of forum that may be enforced. A Florida court is not required to enforce a venue selection clause if compelling reasons exist to not do so. One such compelling reason would be to avoid multiplicity of lawsuits. Another reason could be a conflicting clause in a related agreement under consideration in the same lawsuit, or a statute requiring venue in a particular location such as a lien transfer bond per F.S. §713.24. A venue selection clause may not be enforced when the clause or underlying contract was induced by fraud.
Bear in mind, that other states have their own rules and may not enforce the venue selection clause.
In your contracts, if you have the ability to negotiate, it is good to have a favorable venue provision protecting your interests. When presented with someone else’s form of contract, pay careful attention to this simple provisoin, as it may hae profound effects on your rights. If you have any questions, please contact us.
May all your projects be successful.