Daily Development for
Thursday, September 3, 1998

by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri

CONTRACTS; VENUE SELECTION: A venue selection clause that seeks to establish venue of future claims under the contract is unenforceable.

Omne, Inc. v. Shacks, Inc., 573 N.W.2d 641 (Mich. App. 1997).

An equipment lease provided that venue for any action arising out of the lease would be in a particular court. The lessor brought an action in the court that was specified in the lease and the lessee moved for a change of venue. In a case of first impression, the court held that the venue selection clause was not controlling, but could be considered to the extent it is relevant to the factors that a court must consider when granting or denying a motion for change of venue. To allow the parties to establish venue by contract, the court reasoned, would allow parties to avoid the mandates of statutes and court rules regarding venue and would prevent a court from exercising its power to order a change of venue when the venue chosen by the parties is improper. The court acknowledged that parties to existing causes of action can agree on venue, but left open the question of whether such agreements would be enforceable when they conflict with statutes or court rules.

The dissent cites cases in other jurisdictions, the Restatement on Conflicts of Law, and an ALR annotation to demonstrate that many other jurisdictions have moved to an approach that upholds a contractual stipulation of this type in most cases.

Comment: The key question, as the dissent notes, is whether the provision allocating venue is a part of a fairly negotiated contract not a contract of adhesion or some other form of forced acquiescence by a weak bargaining party. Beyond that, courts may appropriately protect their own interests in refusing to accept inappropriate venue when such choice might impose an undue burden on the court system. Aside from this unlikely occurrence, however, courts should recognize that commercial parties ought to be free to negotiate with respect to dispute resolution to the same degree that they negotiate with regard to the terms of the deal itself.

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