We review a lot of manufacturing contracts for our clients.  As most people know, there are often clauses that dictate what law will apply if there is a dispute (a.k.a. “choice of law” clauses) and where that dispute will be litigated (a.k.a. “forum selection” clauses).  Under most circumstances, the party with the most leverage will choose a forum most convenient to them, which typically is a jurisdiction where they are located.

It is not always as simple when deciding what law will apply.  Often, manufacturers and other corporations will pick a jurisdiction that is perceived to be “pro-business” or “pro-manufacturer,” which may be a state (for instance) that has no connection to the parties or the transaction itself.

One state that we often see selected is the State of New York, which tends to have more sophisticated commercial law.  So, you might think that if you note in your contract that the laws of New York will apply, then the courts will enforce it.  Not necessarily.

By statute, parties with no connection to New York may select New York as the forum if (1) the case relates to a contract of $1 million or more (note:  the dispute can be less than $1 million as long as the contract surpasses the threshold), (2) the contract includes a New York choice-of-forum clause, and (3) the contract includes a New York choice-of-law clause.  NY General Obligations Law § 5-1402.  Therefore, if you want to be sure that New York law will apply, you need to also ensure that any dispute will be litigated in New York as well.  If one or more of the conditions of the statute are not met, the other party can challenge it on the basis that there is no connection to New York.

Outside of New York, states differ in their treatment of the issue.  For example, in Florida, courts have consistently held that contractual forum selection clauses, without more, do not confer personal jurisdiction over a nonresident party.

In the end, it is important to take some extra time to ensure that the contractual provisions that you negotiate are actually enforceable.

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Photo of Jeffrey White Jeffrey White

I am a partner at Robinson+Cole who handles corporate compliance and litigation matters for both domestic and international manufacturers and distributors that make and ship products around the world. My clients have ranged from publicly traded Fortune 500 companies to privately held and/or…

I am a partner at Robinson+Cole who handles corporate compliance and litigation matters for both domestic and international manufacturers and distributors that make and ship products around the world. My clients have ranged from publicly traded Fortune 500 companies to privately held and/or family owned manufacturers. For those looking for my detailed law firm bio, click here.

I am often asked why I have focused a large part of my law practice on counseling manufacturers and distributors. As with most things in life, the answer to that question is tied back to experiences I had well before I became a lawyer. My grandfather spent over 30 years working at a steel mill (Detroit Steel Company), including several years in its maintenance department. One of my grandfather’s prime job duties was to make sure that the equipment being used was safe. In his later years, he would apply those lessons learned in every project we did together as he passed on to me his great respect and pride for the manufacturing industry.

Because of these experiences, I not only feel comfortable advising executives in a boardroom, but also can easily transition to the factory floor. My experience has involved a range of industries, including aerospace and defense, chemicals, energy, pharmaceuticals and life sciences, nutritional and dietary supplements, and retail and consumer products. While I have extensive experience in litigation (including product liability and class actions), I am extremely proactive about trying to keep my clients out of the courtroom if at all possible. Specifically, I have counseled manufacturers and distributors on issues such as product labeling and warranties, product recalls, workplace safety/OSHA, anti-trust, and vendor relations, among other things. I always look for the business-friendly solution to a problem that may face a manufacturer or distributor and I hope this blog will help advance those efforts.