|
By Stacy Osmond and Michael P. Stephens
Floating forum selection clauses differ from standard forum selection clauses because the forum is determined by referencing variable facts, such as the location of the lessor or the location of the party to which the lease is assigned.1 These variable forum selection clauses reflect the modern-day reality of the leasing industry — equipment leases are regularly bought and sold, and often the lessor does not know when or to whom the lease will be sold at the time of the initial transaction.2 This reality is reflected in the highly-litigated floating forum selection clause included in the leases created by NorVergence, a now defunct New Jersey company that leased telecommunications equipment:
This agreement shall be governed by, construed and enforced in accordance with the laws of the State in which Rentor’s principal offices are located or, if this Lease is assigned by Rentor, the State in which the assignee’s principal offices are located, without regard to such State’s choice of law considerations and all legal actions relating to this Lease shall be venued exclusively in a state or federal court located within that State, such court to be chosen at Rentor or Rentor’s assignee’s sole option.3
Courts around the nation have largely found floating forum selection clauses, such as the NorVergence clause, enforceable, but some states continue to hold these contingent clauses unenforceable.
Forum Selection Clauses: General Test for Enforceability
Forum selection clauses are presumptively enforceable.4 In most states, a forum selection clause is held unenforceable only if it is deemed unfair or unreasonable because it was
+ read more |
