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Next Sports, Inc. v. Ssangyong (U.S.A.) Inc.

A-6725-97T2, (N.J. Super. App. Div. 1999) (Unpublished)

CONTRACTS; FORUM SELECTION—The forum selection provision of a contract, if otherwise enforceable, will be enforced even if it wasn’t expressly negotiated.

A company obtained a license to manufacturer and sell basketball sneakers endorsed by a famous star. It then contracted with a supplier to provide financing, warehousing, distribution, and related services respecting that license. The contract contained a clause stating that, “[t]his Agreement shall be deemed to have been made in, and the interpretation thereof and the performance thereunder shall be governed by, the laws of the State of New York.” In addition, the contract provided that all disputes would be resolved in New York federal or state courts and vested exclusive jurisdiction in them. There was no showing of overwhelming or coercive bargaining power or unfairness in the contract. At the time the contract was prepared and executed, the supplier raised no objection to the forum-selection clause. The lower court found the forum-selection clause to be unacceptable because it seemed to equate non-negotiation with coercion, and indicated that forum-selection clauses would be enforced only if they were preceded by specific negotiation on that subject. The Appellate Division, in reversing the lower court, found no such significance in the absence of the negotiation. In fact, to the Court, the absence of discussion seemed to imply a lack of concern. In the Court’s view, the provision could have been as desirable and acceptable to either party to the contract. In addition, the Appellate Division found nothing in the clause that would contravene the policy of New Jersey. It was a private contract where the parties could be fully and fairly represented in New York or New Jersey. Both parties were New York corporations and both had offices in both New York and New Jersey. Although the contract may have been negotiated in New Jersey, it was apparently signed in New York. In addition, both sides were represented by New York attorneys. In summary, the Court did not find the forum-selection clause to be the result of fraud, overreaching or overwhelming bargaining power. It did not adversely affect any public policy and it did not result in any undue inconvenience to any of the parties. Therefore, it was enforced as provided for in the contract.


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