“This Contract shall be governed by and construed under the laws of the state of __________. The parties agree that any legal proceedings arising out of this contract shall be litigated in any court of competent jurisdiction in the state in which the Hotel is located.”
The choice of law and venue clause may become significant in the event of a serious dispute between the hotel and the group because it spells out two things: under what state's laws the contract language will be interpreted in the event of a dispute; and where a lawsuit can be filed and litigated.
Each state has statutes that address contracts and a body of case law that has developed from prior contract disputes resolved in that state (common law). This means that identical contract disputes litigated in two different states could have completely different outcomes, based on each state's laws and case precedents.
For example, say a group is being sued by a hotel. Where a lawsuit can be brought and defended is a legal question of jurisdiction. To oversimplify this issue, it is important to know that a group can always be sued in its own backyard (where the group is located and/or incorporated, for example) or where the contract is to be performed. One might say that the contract is to be performed in the state in which the hotel is located — where the meeting is to be held. Without “choice of venue” language in the contract, a dispute might be litigated either where the group is or where the hotel is.
This clause specifies that the dispute will be litigated where the hotel is located. The pros: The group might be subject to jurisdiction there anyway, if that is where the contract is to be performed. Also, any witnesses or documents required for resolution of the dispute may already be located at the hotel (if the dispute is over something that happened on site, for example). The cons: The laws and case precedents may be more favorable to the group in the group's home state or in another state that would have jurisdiction if this language were not in the contract. Also, travel expenses to and from the hotel's locale to bring or defend a lawsuit could be costly.
Tyra W. Hilliard, Esq., CMP (tyra@mindspring.com) is a meeting industry attorney and Assistant Professor of Event and Meeting Management at The George Washington University in Washington, D.C.
More Clause and Effect Columns:
Clause and Effect: Attrition
Clause and Effect: Cancellation Policy
Clause and Effect: War and Force Majeure
Clause and Effect: Indemnification and Hold Harmless
Clause and Effect: Construction, Remodeling, and RenovationClause and Effect: Dispute Resolution
Clause and Effect: Function Room Assignments
The Five Toughest Meeting Clauses
Destinations and Legal Jurisdications
Clause and Effect: Disclosing Taxes, Fees, and Surcharges
Clause and Effect: Overbooking and Guest “Walking”
Clause and Effect: Use of Outside Contractors
Clause and Effect: Conflicting Groups
Clause and Effect: Lowest Rate Clauses
Clause and Effect: Food Donations
Americans with Disabilities Act
Clause and Effect: Early Departure Fees
Clause and Effect: Complimentary Room Nights
Clause and Effect: Hotel’s Right to Eject Troublemakers
Clause and Effect: Hotel’s Right to Modify Meeting Space
Clause and Effect: Marriott and the IATA Requirement
Clause and Effect: Establishing Credit
Clause and Effect: Putting Group Charges on the Master Bill
Clause and Effect: Third-Party Commission Clauses
Clause and Effect: Disputing Charges