Are Forum Selection Clauses in a Contract Enforceable?

Yes, but only when they are mandatory forum selection clauses. Parties to a contract have the right to select and agree on a particular venue to have their disputes determined. The key distinction, however, is whether the forum selection clause is mandatory or permissive. Only a mandatory clause is enforceable such that a court will dismiss a case for improper venue.

So how do you determine whether a forum selection clause is mandatory or permissive? Mandatory clauses require an exclusive venue for disputes to be resolved. In contrast, permissive clauses only provide “consent to jurisdiction” in a particular venue, but do not limit disputes to a particular forum. The linchpin in determining whether a clause is permissive is if it lacks words of “exclusivity” in selecting a particular forum.

In sum, the courts follow rules of contract construction in determining whether a forum selection clause is mandatory or permissive. Indeed, the use of certain terms and phrases in the clause that suggest the exclusivity of a particular forum, e.g., shall, must, only, select, limited to, the proper, forsaking any other, etc., are more likely to lead a court to conclude the clause is mandatory. If the court reaches such a conclusion, it is required to dismiss a case for improper venue if a party moves for dismissal.