Bob is a merchant in New York and Betty is a merchant in California. Bob wants to do business with Betty but he is concerned tha
t if a lawsuit should result from their transaction, he might have to travel to California and hire a California litigation lawyer to litigate the dispute. What type of clause should Bob try to indlude in his contract with Betty that will probably assure him that if litigation ensues, it will take place in New York? A. Confession of judgment clause
B. Forum selection clause
C. Choice of law clause
D. Substantive clause
The correct answer is letter "B": Forum selection clause.
Explanation:
A forum selectionclause is a provision stated in a contract by which both parties agree that in front of litigation only a specific forum will be selected. This clause is enforceable unless the party unwilling to accept the provision proves it is unreasonable because of a determined circumstance. In case the parties decide not to litigate, this clause encourages settlement in a selected forum.
