≡ Menu

Be careful what you ask for in your standard contract form – the other side may demand it for themselves

So, I’m helping a vendor respond to a customer’s markup of the vendor’s standard sales contract. (I’m changing some details here for confidentiality reasons.) The forum-selection clause in the vendor’s form contract says that all litigation will take place in the vendor’s home city. The customer, though, has the upper hand in the negotiation; unsurprisingly, its procurement people have marked up the draft contract to read that all litigation will be in the customer’s home city.

We’re going to try to convince the customer’s procurement people to just delete the forum-selection clause entirely. If we succeed, then any litigation can occur wherever the default legal rules allow. (If the vendor were to be the plaintiff, their trial counsel might well recommend suing the customer in the customer’s home city anyway, for tactical reasons I won’t go into here.)

Even if we’re successful, the vendor has had to spend precious staff working time in negotiating this point. With the ‘shot clock’ running down in the fiscal year, the vendor surely would have been happier for its staff to spend their time instead working with another customer.

Lesson: In drafting a contract, sometimes it’s best to let sleeping dogs lie, to be deliberately silent about Issue X, even though doing so might mean giving up the theoretical possibility of an advantage at some indeterminate point in the future.

{ 0 comments… add one }

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.