Legal Niches

In Krause v. Chippas, 2007 WL 4563471 (N.D. Tex. 2007), the United States District Court for the Northern District of Texas has transferred the case in reliance upon a forum selection clause found in the FuturesCom.com Service and Usage Agreement.

That agreement states, in relevant part:

You agree that any controversy between FuturesCom.com, it[s] owners and/or employees and You as User of the site and/or Services offered within and/or provided within this site arising out [of] use of this site or services offered within this site regardless of the manner of resolution, shall be arbitrated, litigated (tried in a court of law), or otherwise resolved by a tribunal location in Palm Beach County Florida.

The agreement also states that use of the website or the services it offers "signifies" the user?s agreement to the terms of the Service and Usage Agreement.

Though the Plaintiff claimed that he never agreed to the Service and Usage Agreement or to any forum selection clause, the Court noted that the Defendant had

produced evidence showing the [FuturesCom.com] in December 2004, at the time that [Plaintiff] made a payment to [Defendant] through the website. At the time, the lead page of the website clearly stated: "USE OF THIS SITE AND OR SERVICES OFFERED WITHIN THIS FUTURESCOM.COM SITE SIGNIFIES YOUR AGREEMENT TO THIS SERVICE AND USAGE AGREEMENT." . . . This page also included the forum selection clause naming Palm Beach County, Florida as the forum for the resolution of "any controversy ... arising out of use [of] this site or services offered within this site.

The Court held that a forum selection clause such as the one found in the Service and Usage Agreement is enforceable and that Plaintiff could be charged with constructive knowledge of its terms where the clause was included on the website when Plaintiff accessed it. Under these circumstances, the forum selection clause must control absent a strong showing that its enforcement would be unreasonable or unjust or that "the clause was invalid for such reasons as fraud or overreaching." M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15 (1972). Since the Plaintiff failed to carry his burden of making a "strong showing" that enforcement of the clause would be unreasonable or unjust, the Court ordered the case to be transferred to the forum designated in the forum selection clause.

As this case reminds us, a forum selection clause remains an important part of any website terms of use.  Most courts will enforce shrink-wrap and click-wrap terms of use and an appropriately drafted forum selection clause can prevent an Internet business from incurring the time and expense of defending a lawsuit brought in a distant jurisdiction.