Details Matter: Contract Provisions Regarding Forum and Venue

Kevin Anderson Contracts, Transportation

To move goods and services across and through the country, our nation’s economy relies on trucking companies. But those goods and services are rarely if ever moved without a contract first being drawn up and agreed to. And every term and phrase in that contract, bill of lading, or agreement is important to not only moving the goods, but resolving disputes when they inevitably arise.

When companies enter into agreements to get business done, neither party really anticipates a dispute happening, but disputes arise nonetheless. Because of this reality, it is important to have all the specifics outlined with every agreement made. This lesson was brought to light in a shipping dispute recently decided in federal court.

District Judge Analyzes Forum Clause

In Viswanathan v. Moving USA Inc., Dist. Court, D. Nevada (2016), there was a dispute between the shipper and carrier over a botched move. According to the opinion, the shipper contracted with the carrier to move their goods from North Carolina to Nevada, but what resulted was not what either party expected going into the agreement.

The opinion states that the shipper’s goods arrived several months later than expected, much of it damaged, and some of it lost. To be sure, the shipper tried to get the carrier to pay for the loss and damage, but they did not, so the shipper sued the carrier. When it got into the middle of litigation, the parties argued over one phrase in the contract about where the lawsuit was to be brought.

That phrase, a forum selection clause, said that the parties would agree to submit to bring any litigation in Florida. But the argument was whether that statement “agree to submit to” constituted a mandatory forum selection, or a permissive selection of where to bring the suit. If it was a mandatory clause, then the shipper brought the suit in the wrong court; if the clause was permissive, then it did not matter. Though it was just one phrase the success of the lawsuit depended on its meaning.

The court in this case decided that “agree to submit to” constituted a permissive forum selection clause, and so the case was not dismissed. But importantly to this post, the court also noted that this could change depending on the language of the rest of the contract in different cases. This is an important lesson for those dealing in shipping contracts day in and day out.

Attention to detail and understanding what contracts will mean in litigation is important to avoid negative outcomes when lawsuits arise. To best prepare your company for these inevitable situations, the best step you can take is to retain the best legal counsel available to ensure that your contracts are sound and in your best interests.

At Anderson and Yamada, P.C., our experience litigating shipping disputes puts us in a unique position to counsel you on how to best develop contracts. Contact us today so we can put our experience to work for you.