Adam Trenk, Rose Law Group Partner and Director of Equine Law Dept., writes for Arizona Horse Connection ‘Choice of law, venue & forum selection’

Adam Trenk

By Adam M. Trenk, Esq. | Arizona Horse Connection

As an attorney servicing the business needs of the equine community in Arizona for the last eight and half years, and having recently been licensed to practice law in Kentucky, I have worked to negotiate and document countless transactions. As a rule of thumb, I advise that any transaction involving any ongoing obligations (such as a boarding agreement or breeding contract) and/or the exchange of money in excess of Five Thousand Dollars ($5,000.00) (as may be the case for the purchase and sale of a horse) should be documented by a contract written or at least reviewed by a qualified attorney.

I am also frequently called upon after a transaction has been cemented but then led to a dispute, which can happen for any number of reasons. In that capacity, I either have to mount a defense (if my client has already been sued), or work to resolve a matter without resorting to litigation and if that fails advocate their position through the court system (when my client comes to me with the grievance against their counterpart to a transaction). It is at this juncture that I have to help my clients grapple with the choice of law, venue, and forum selection.

How and where a case is brought to court is determined by several factors that most non-lawyers take for granted. When a transaction is documented by a written contract, that document should have a “choice of law” clause. A choice of law clause states the laws a particular jurisdiction shall govern in the event of a dispute arising out of the transaction.

Choice of law clauses are particularly important when the parties to a contract reside in two different states. For example, if you live in Arizona and are selling a horse to someone in Colorado, you will want the contract to state that Arizona law be applied should the situation devolve into a lawsuit.

However, on its own this choice of law language does not mean that the parties could not end up battling out the application of Arizona law in a courthouse in Colorado. To avoid that, potential venue and forum may also be pre-determined by a contract.

Venue is the geographic location where a dispute is to be brought. It is advisable even for contracts that do not cross state lines to contemplate venue. Thus, the contract should state that a dispute is to be resolved in a specific county or city.

Parties to a contract have the absolute legal right to stipulate to a choice of law, venue, and forum in the event the matter contemplated results in a dispute. If a transaction is consummated without clear choice of law and forum selection being clearly defined and detailed in a contract, a party to a transaction could literally be forced to defend themselves in unfamiliar territory and grappling with foreign (at least out of state) laws.

Getting sued in another state will not only put you at a strategic disadvantage but can result in exponentially greater litigation costs, having to work with attorneys from afar, and physically having to travel to attend depositions, settlement conferences, and ultimately trials. 

A “Choice of Law/Venue and Forum” clause may read something like:

           The laws of the State of Arizona shall govern this Agreement. In the event of a dispute arising out of this Agreement, the parties hereto mutually consent and agree that it shall be resolved exclusively in a court of appropriate jurisdiction in Maricopa County, Arizona.

Here, the italicized words detail your choice of venue, and the emboldened text contemplates venue and forum. The forum is not specific, but in most cases this language is more than sufficient.

When entering a contract where the amount in controversy has the potential to exceed $75,000 (which may or may not be the amount of money exchanged, but a total of the consideration paid plus consequential damages arising from a breach of an agreement), forum selection becomes much more important if and when the parties are residents of different states. In such circumstances, if parties do not stipulate to a specific state court, the dispute could end up in Federal Court which increases litigation cost and extends the time frame for a final adjudication substantially.  In those instances, your “Choice of Law/Venue and Forum” clause should read like so:

The laws of the State of Arizona shall govern this Agreement. The parties hereto irrevocable consent to the personal jurisdiction of the State of Arizona. In the event of a dispute arising out of this Agreement, the parties hereto mutually agree that it shall be resolved exclusively in a State court of appropriate jurisdiction in Maricopa County, Arizona.

Here the underlined text cements the parties’ respective consent to the state’s jurisdiction even if they have no other ties to the state besides the specific transaction contemplated, and prevents an out of state party from attempting to bring the matter before a federal bench.

In the absence of the Choice of Law, Venue, and Forum clauses, these matters can become extremely complicated. If you are engaging in a transaction to buy, sell, or lease a horse to a party outside of your state of residence, or importing or shipping breeding material, and a dispute erupts over a breach of contract, you may end up entangled in legal battles in places you would never have imagined.

Making sure you anticipate the possibility of the transaction not going smoothly when you draft an agreement is critically important. The amount of time and resources dedicated to doing a little preventative planning will be but a fraction of what the toll on you could be if you take shortcuts. Having a qualified lawyer with experience in the type of transaction you are engaging in to draft or review the documents may well be the best insurance.

Adam M. Trenk, Esq. is a Partner at Rose Law Group pc . As an attorney he practices Equine Law, Strategic Development, Transactional Matters, Conflict Resolution, and Government Relations. He is an Avid Horseman and active in the Equine Community. Trenk sits on the Advisory Board for the Scottsdale Community College Equine Science Program.  He served his community in Cave Creek as an Elected member of the Town Council from 2009 to 2011, and again as Vice Mayor 2013-2015. Adam Trenk can be contacted by email at ATrenk@RoseLawGroup.com or by phone at 602-402-3335. Like him on Facebook at www.facebook.com/EquineAttorneys. Follow him on Instagram @theLawHorse. 

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