What Governs the Forum Selection Clause? | Business Transaction Newsletter

In the case of Wolaver v. Jbeez, the Court of Appeals dealt with the issue of whether a Forum Selection Clause in a contract governs or whether the Forum Selection Clause in the Tennessee Consumer Protection Act governs. In the Wolaver case, the Wolavers leased a watercraft vehicle. After one day of use, they determined that the boat was unsafe for continued use. The Wolaver’s sued Jbeez in Franklin County, TN where they lived. The Wolaver’s claim Jbeez violated the Tennessee Consumer Protection Act because it advertised the provision of goods and services in certain quality, and then provided goods and services of lesser quality. The Wolavers alleged that Franklin County was a proper venue because they took the possession of the watercraft vehicle in that county.

Jbeez moved to dismiss the case because the lease contract for the watercraft vehicle had a Forum Selection Clause that provided that any disputes between the parties would be resolved in a court of jurisdiction in Putnam County, TN.

The Trial Court dismissed the Wolaver’s claim because of improper venue based on the lease’s Forum Selection Clause. The Court of Appeals reversed the Trial Court’s ruling and held that the Tennessee Consumer Protection Act does not void a Forum Selection Clause in a contract. The Court allowed the case to be dismissed without prejudice. The case could be refilled in the contractual designated forum of Putnam County, Tennessee.

MY RECOMMENDATION: Parties to a contract always need to be conscious of the Forum Selection Clause. Often times, the forum provides for dispute resolution in a very inconvenient place for one of the parties, and it could result in a significant costs and a strategic disadvantage in litigating in that jurisdiction.

Yours very truly,

RAINEY, KIZER, REVIERE & BELL, P.L.C.

William C. Bell, Jr., Attorney at Law

This letter is intended to provide you with ideas for consideration in commercial transactions.  It is not intended to give a general solution applicable to all apparently similar individual problems, since slight changes in facts may require variance in legal advice.  Please contact legal counsel with specific questions.