Legal Question in Business Law in Georgia

a law firm drafts a contract for the purchase of assets from Firm B for a client. The client’s primary place of business is in New York state. Firm B has a principal place of business in Florida. The contract is an e-contract that requires an electronic signature; the contract will be “signed” in Florida. If there is no clause in the contract that mandates venue or jurisdiction, in what state(s) may the parties bring suit and why?

Asked on 6/06/13, 7:18 pm

1 Answer from Attorneys

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Is this a law school exam question? Simple choice of law and jurisdiction principles apply.

First, which of the parties would be in violation of the agreement? While the plaintiff (the person suing) might be tempted to sue the company where he/she resides or has a primary place of business, the question to ask is whether the plaintiff will be able to collect on any judgment. So suing where the defendant resides/has a primary place of business may be the smartest course of action. So suit can always be brought in the state where the defendant resides but the plaintiff may want to weigh the costs/benefits of bringing suit in the plaintiff's home state and may want to look at the enforcement of judgment laws in each state.

The person/business suing may also be able to sue where they reside provided that jurisdiction can be exercised over the defendant consistent with state law and US Constitutional principles. A business or individual can sue another business/individual where there is specific or general jurisdiction. Specific jurisdiction may exist where the out-of-state defendant entered into an agreement with the plaintiff and the agreement was made in the plaintiff's state of residence or where the defendant causes some kind of harm to the plaintiff. General jurisdiction exists in situations where the defendant either has ties of some kind to the plaintiff's state or does business in plaintiff's state.

Assuming that jurisdiction would be proper in either Florida or New York, then the next question becomes a question of choice of law principles/venue. Where was the contract made (you say Florida)? Where was it to be performed? Where is the bulk of the evidence (witnesses or documents) going to be located? That may point to one state or the other.

At the end of the day though, if the contract is silent on forum selection then plaintiff gets to choose. If the defendant does not like it then he/she/it has to file objections to the state's exercise of jurisdiction or raise inconvenient forum grounds to get the case transferred.

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Answered on 6/20/13, 7:43 pm

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