While a choice-of-law provision may govern which state’s law will apply, a forum- selection clause controls where the dispute must be brought. For example, a forum-selection clause may specify that disputes must be brought in Arizona, or more particularly, in Maricopa County. These clauses are usually upheld if the clause was the result of fair bargaining, not the result of fraud, reasonable in application at the time of the lawsuit and will not deprive the litigant of “his day in court.” Thus, while the clause should not be drafted into a contract to deprive potential litigants of an opportunity to bring valid claims, if fairly bargained for, one party may genuinely seek to secure a litigation forum that will be convenient to that party (even if it is inconvenient to the other party). The ability to bring or defend a lawsuit close to home can have a tremendous impact on the costs of litigation, the use of legal counsel that a party is familiar with, and other strategic issues.
If a dispute arises pursuant to a contract, the inclusion of dispute related clauses as discussed in this article may have a material impact on the outcome of the dispute. Each party to a contract should seek the advice of legal counsel to assess whether dispute-related clauses are necessary in the contract, and how such clauses impact each party.