What court should resolve your disputes?

Commercial contracts can be long and complex. While you may not understand every element of the contract, you need to understand the jurisdiction where you may have to litigate a dispute involving that contract.

For many Minnesota business entities, this state may be the most practical and will adequately serve your needs. But there may be other concerns when choosing jurisdiction, based on other factors that may make up a transaction.

Clarity is important within your contract. A poorly drafted forum selection or choice of law clause could lead to additional litigation as the parties argue over whether a clause is mandatory or discretionary. If a court is granted jurisdiction, it should be clear within the contract whether this means a court may take jurisdiction of the matter or if it is the only court where jurisdiction is proper.

You also should specify which law applies. If you make Minnesota the exclusive jurisdiction for settling disputes, the contract should also clearly state that Minnesota law applies, or if a Minnesota court should use the laws of another state, such a Delaware.

Coherence is another concern. In some complex documents, parties may wish to use the law of different jurisdictions for a different part of the agreement. While this is possible, it adds potential ambiguity and creates an area of complexity that is ripe for dispute.

The danger with such complexity is that the cost of litigating the preliminary matters could become so high that it makes it impracticable to proceed with any dispute, no matter how legally viable because ligating it could be rendered uneconomic by the cost of the preliminary, jurisdictional litigation.