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Court Decision Illustrates Importance of Choice-of-Forum Clauses in Contracts

Jan 10, 2022

A recent court decision shows how important it is for Connecticut businesses to include a provision in their contracts, whenever possible, designating Connecticut as the forum to litigate disputes arising out of the contract.

In a case called North Sails Group, LLC v. Boards and More, GmbH, the plaintiff, a Connecticut company, filed a lawsuit in Connecticut against the defendant, an Austrian company, for breach of a licensing agreement. The parties’ relationship spanned almost 30 years. Their contract did not include a provision saying where the parties would be required to litigate any disputes between them.

The Connecticut Supreme Court ruled that despite the parties’ long course of dealing, the defendant’s contacts with Connecticut were insufficient to support Connecticut jurisdiction. The court therefore agreed with the trial court’s decision to dismiss the case. The Connecticut company’s recourse now is to bring an action in the courts of Austria.

It is quite likely that the outcome would have been different if the parties’ contract had included a forum-selection clause choosing the courts of Connecticut for any lawsuits between them. Connecticut companies that transact business with counterparties in other states and countries should take note.

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