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New Jersey bill aims to ban out-of-state litigation clauses

When it comes to avoiding contract disputes, there is an old saying that still holds true: An ounce of prevention is worth a pound of cure. In most cases, significant time and expense can be avoided later if all involved parties originally write a contract with as much clarity as possible. Companies doing business in the consumer arena should pay special attention to the terms of their contracts, as they may be subject to regulatory or legislative measures.

A legislative panel of the New Jersey Assembly has forwarded a bill to legislature that seeks to prevent usage of certain terms in consumer contracts. The terms causing concern are those that force the parties to travel out of the state to litigate consumer contract disputes. 

One lawmaker supporting the bill stated that it was not aimed at companies using contracts that were fair and free of fine print. Instead, the intention is to address contracts containing hidden or hard-to-find clauses designed to make it difficult for consumers to seek redress during contract disputes. The bill has passed the committee dealing with consumer affairs and now moves on to the full Assembly for consideration.

Whether a company is dealing with commercial contract disputes, breach of contract claims, intellectual property disputes, or similar matters, the wording of the contract where the claims originate is likely to be crucial.  As a result, thoroughly reviewing contract terms and clauses prior to signing should be an essential part of the process.  Companies which follow this practice, both in dealing with corporate and consumer contracts, are likely to improve their chances of being successful should they become involved in contract litigation.

Source: New Jersey Biz, “Assembly panel passes bill preventing companies from requiring contract disputes be settled out-of-state,” Andrew George, Nov. 18, 2013

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