Is the Foreign Venue Provision in Your Contract Enforceable?

Venue—the location where a lawsuit is to be filed—is an important issue to consider when reviewing a contract.  Contracts often contain a provision stating that the venue for all claims arising out of the contract shall lie solely and exclusively in a certain location or that the contract shall be enforced in the courts of a specific state.  This typically is advantageous to the party that prepared the contract because they are requiring the other party to come to their “home turf” for any disputes arising out of the contract.  Some owners or contractors may believe that by requiring venue to be in a foreign state the adverse party may decide not to pursue a claim due to the costs and expenses associated with traveling to a foreign venue and finding an attorney in that location.  Thus, this type of provision may be used as a strategy to reduce potential claims to enforce the contract. The question is—is it enforceable?

Many people believe that they are bound by every provision contained within the contract because they signed it.  That is not always the case.  Although the parties to a contract can stipulate to a certain venue, it may not always be enforceable.

There is a Florida statute pertaining to this specific venue issue that is unknown to many or often overlooked.  In 1999, the Florida Legislature enacted Section 47.025, Florida Statutes, “Actions against contractors,” which provides:

Any venue provision in a contract for improvement to real property which requires legal action involving a resident contractor, subcontractor, sub-subcontractor, or materialman, as defined in part I of chapter 713, to be brought outside this state is void as a matter of public policy.

Pursuant to Section 47.025, Florida Statutes, when such contractual foreign venue provisions are void, the following applies:

Any legal action arising out of that contract shall be brought only in this state in the county where the defendant resides, where the cause of action accrued, or where the property in litigation is located, unless, after the dispute arises, the parties stipulate to another venue.

Stated another way, venue provisions in contracts for improvements to real property requiring a Florida contractor, subcontractor, sub-subcontractor, or materialman to institute legal action outside of Florida are void.

It is important to note that the statute refers to stipulating to another venue “after the dispute arises.”  Therefore, once a dispute arises under a contract containing a void foreign venue provision, the Florida contractor, subcontractor, sub-subcontractor, or materialman should be careful to not unwittingly stipulate to another venue other than the local Florida venue that applies.  Rather, they should consider whether to insist upon enforcing Section 47.025, Florida Statutes and immediately contact an experienced construction attorney for assistance.

Is the foreign venue provision in your contract enforceable?  Are you required to bring your legal claim in a foreign state as required by the contract that you signed?  It is strongly recommended that you contact an experienced Florida construction lawyer to discuss this topic.

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