Forum Selection: Test For Unreasonableness/Unequal Footing

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David A. Szwak
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Joined: Tue Jul 26, 2005 4:15 am

Forum Selection: Test For Unreasonableness/Unequal Footing

Post by David A. Szwak »

In Freedman v. America Online, Inc., 294 F.Supp.2d 238, [U.S.D.C. Conn. 2003], vacated in part on reconsideration, 2004 WestLaw 234661, the [u46][b46]court held that a valid mandatory forum selection clause is unreasonable if: [1] its incorporation into the agreement was the result of fraud or overreaching; [2] the complaining party will for all practical purposes be deprived of his day in court due to the grave inconvenience or unfairness of the selected forum; [3] the fundamental unfairness of the chosen law may deprive the plaintiff of a remedy; or [4] the clauses contravene a strong public policy of the forum state[/b46][/u46].

[u46][b46]Some courts have adopted the following tests to determine whether a forum selection clause is reasonable in terms of fundamental fairness: [1] whether the clause was obtained by fraud, duress, abuse of economic power, or unconscionable means; [2] whether the designated forum would be closed to the suit or would not effectively handle the suit; or [3] whether the designated forum would be so seriously inconvenient that to require the plaintiff to bring suit there would effectively deprive him of his day in court[/b46][/u46]. Long v. Dart Intern., Inc., 173 F.Supp.2d 774 [U.S.D.C. W.D. Tenn. 2001].

In Reynolds v. Paulson, 871 So.2d 1215 [La. App. 4 Cir. 2004], the court noted that “...[u46][b46]commercially sophisticated parties are free to limit their disputes to any forum of their choosing[/b46][/u46]. There is no showing that the parties were not on [u46][b46]equal footing[/b46][/u46]. The parties who conferred and approved the terms of the agreements were sophisticated negotiators.”
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