Part 4 – Louisiana Venue Analysis: Negotiating to Avoid Unfavorable Venue in Contracts
When a choice of venue clause is unfavorable for a contracting party, that party can try to negotiate into the contract a way to avoid the unfavorable venue in the event that there is a dispute arising from the terms of the contract. There are several options that a contracting party can aim for, including adding in an arbitration clause, a limitation of liability clause, or an indemnity clause.
Arbitration Clauses in Louisiana Contracts
In situations where one of the contracting parties risks litigation in a venue that is unfavorable due to the venue provision of the contract, the contracting party could try to negotiate for the inclusion of an arbitration clause into the contract. Arbitration is an alternative to going to court when there is a dispute. Since the contracting parties agree to be bound by an arbitration clause, their dispute will more than likely never end up in court in the unfavorable venue because the courts generally compel arbitration in contract disputes where the parties have agreed to arbitrate.
Including Limitation of Liability Clauses
One way to reduce risk in contracts is to include a limitation of liability clause in situations where the venue provision dictates that contract disputes are to be litigated in an unfavorable venue. Limitation of liability clauses are effectively caps on monetary damages or fees paid pursuant the contract. If a contract dispute between the parties is litigated, the fact that the suit was brought before an unfavorable venue has little bearing on the outcome since damages are capped at a pre-set amount.
Limitations of liability are generally enforceable unless they run counter to other laws, public policy or morals. The contractually negotiated caps for liability are also unenforceable if they are directed to capping damages for intentional or gross negligence that results in damage or physical injury to the other contracting party. However, the parties are permitted to enter into a contract that excludes liability for negligence, but special circumstances are required.
Negotiating to Introduce An Indemnity Clause
Indemnity clauses are very useful in shifting liability away from one of the contracting parties and onto the other. Under an indemnity clause, one of the contracting parties agrees to assume responsibility for legal issues and costs in the event that there is a litigation over the terms of the contract. In Louisiana, indemnity is not usually for any liability incurred by the indemnified party to the contract. For instance, indemnity generally will not extend to willful misconduct, or liability created by fraud.
Work With An Experienced Contract Disputes Lawyer
As you are preparing to enter into a contract, you should work with an experienced Louisiana contracts lawyer to ensure that you are getting fair terms. When the mandatory venue of the contract is unfavorable, you can work with a lawyer to look into negotiating a way to avoid litigation in the unfavorable venue into your contract. Contact an experienced Louisiana licensed attorney if you need help negotiating a contract or dealing with a dispute arising from your contract.
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Kristin M. Lausten
This article is provided as an educational service for general informational purposes only. The material does not constitute legal advice or rendering of professional services.