Venue Selection Contract Clauses and Hometowning

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Venue Selection Contract Clauses and Hometowning

Let's imagine a scenario involving Larry Lawyer and Carl Client. The case is a breach of oral contract for the sale of a portion of a grocery store in small town. Carl gave his portion of the store to the buyer but they buyer paid only a small amount of the agreed upon price. It went something like this.

Larry calls Carl and tells him, 'Hey Carl, do you remember that hearing we had this morning where I told you it's pretty much a sure thing?'

'Yeah, are you ready to head out?' responded Carl.

'I'll be ready soon but something changed and we'll probably lose. It's better to cancel. Opposing counsel didn't send me the documents regarding the change like he should have, but we won't get a win just because of that.'

'We have to go to court' insisted Carl.

'I'm going to drive out to the middle of nowhere and I'll have to bill you for all the driving time just to lose. I don't think it's a good idea.'

'Fine, bill me but we're going to court!' was Carl's adamant reply.

It's important to define a few terms before continuing. A venue selection clause (sometimes used interchangeably with a forum selection clause) is a statement in the contract that states, in case of a dispute, which court and county the dispute will occur in. Generally, they are upheld. Hometowning is a less formal term. It refers to where an out-of-town attorney is disfavored in a small town because the judge is friends with the local lawyer.

In this scenario, Larry and Carl lost and Carl received a large bill. One lesson is to pay attention to your lawyer. However, not only would they lose. The judge completely ignored opposing counsel's failure to follow a number of procedures. Larry sees the loss coming. What he didn't see coming was that any future battles would disproportionately favor the other side, making winning a simple case even harder.

The first mistake was to not have contract. If it's not in writing, it didn't happen. The second mistake was to not have a venue selection clause to prevent Carl and his lawyer from being hometowned. Had Carl signed a written contract stating that all disputes would be resolved in Hillsborough County, where Carl lives, his attorney wouldn't have to bill for all time spent driving to the middle of nowhere only to find out that the judge is best buddies with the lawyer on the other side.

Therefore, if you're considering entering into a business deal, always have a venue selection clause to better predict where any dispute will occur, especially if the business is located in a small town.