Tuesday, January 09, 2007

forum selection clause - validity

Patriot Commercial Leasing Company v. Kremer Restaurant Enterprises

http://www.courts.state.pa.us/OpPosting/Superior/out/A24012_06.pdf

In this case involving two commercial entities, the court held that forum selection clauses are presumed to be valid when the parties have freely agreed that litigation shall be conducted in a particular forum and where the agreement is not unreasonable at the time of litigation. Such a clause will be considered unreasonable "only where its enforcement would, under all circumstances existing at the time of litigation, seriously impair a party's ability to pursue his cause of action....Mere inconvenience or additional expense is not the test of unreasonableness." The "modern trend is to uphold the enforceability of forum selection clauses where those clauses are clear and unambiguous."

A "forum selection clause in a commercial contract between business entities is presumptively valid and will be deemed unenforceable only when: 1) the clause itself was inducted by fraud or overreaching; 2) the forum selected in the clause is so unfair or inconvenient that a party, for all practical purposes, will be deprived of an opportunity to be heard; or 3) the clause is found to violate public policy."