A 2010 legal decision concerning coin and stamp collecting highlights the importance of understanding contractual forum terms.
An older man signed a contract and assigned his coin and stamp collection to a company apparently for the purpose of selling it. A dispute arose, and the man filed suit. The defendants asked the court to dismiss the lawsuit based on a forum-selection clause in the contract. The clause is contract language whereby the parties agree that all disputes will be resolved in a court at a specific location, waiving the right to file suit in any other court. These clauses can be worded in numerous ways and tend to be largely overlooked until there's a problem and someone reaches for the contract.
So, in the coin and stamp case, the defendants wanted the court to enforce the forum selection clause that required that lawsuits be brought in New York. The man challenged enforcement of the clause on a variety of grounds that to a reasonable ear might seem pretty persuasive. Among other things, he argued that the forum selection clause was never brought to his attention, and, using the Supreme Court's test in an admiralty case, that his age made it difficult for him to litigate a case in New York when he was located in Illinois. While enforcement of forum clauses depends on the circumstances and the particular law being applied, the court rejected these arguments and said that the man knew he was signing a consignment contract and that traveling to New York, while potentially difficult, did not result in him being deprived of his day in court.
This is a good lesson for those of us in the maritime business. Loads of maritime contracts have forum selection clauses and it's important to understand that courts will enforce the terms. Litigation strategies can be capsized and unnecessary attorneys' fees incurred pursuing claims in a forum other than what was contractually agreed to.
Of course whether a forum clause is enforced turns on the circumstances, but it makes sense for you to understand its implications, preferably before you sign a contract.
