Will the forum clause be enforced: here, or somewhere else?
Yes. New York enforces forum selection clauses because they provide certainty and predictability in the resolution of disputes, and objections to the contract's choice-of-law clause are not a warrant for refusing to enforce its choice-of-forum clause. § 5-1401 does not reach every contract: it “shall not apply to any contract, agreement or undertaking (a) for labor or personal services, (b) relating to any transaction for personal, family or household services, or (c) to the extent provided to the contrary in subsection (c) of section 1--301 of the uniform commercial code”, so an employment or consumer agreement cannot buy New York law under it however large the transaction, though subdivision 2 adds that "Nothing contained in this section shall be construed to limit or deny the enforcement of any provision respecting choice of law in any other contract", so falling outside the statute is not itself a reason to refuse the clause. Running the other way, GOL § 5-1402(1) opens New York's courts to an action against a foreign corporation, non-resident or foreign state where the action arises out of a contract for which New York law was chosen under § 5-1401, the transaction covers in the aggregate not less than $1,000,000, and the contract contains the counterparty's submission to New York jurisdiction, notwithstanding statutes that would otherwise limit the right to sue here. The construction-contract void has a threshold of its own: GBL article 35-E reaches a written or oral agreement for construction, reconstruction, alteration, maintenance, moving or demolition "where the aggregate cost of the construction project including all labor, services, materials and equipment to be furnished, equals or exceeds one hundred fifty thousand dollars", and excludes public works projects and their subcontracts, one-, two- and three-family dwellings, a residential tract development of a hundred or fewer one- or two-family dwellings, residential projects of 4,500 square feet or less, and certain subsidised residential projects of fewer than seventy-five units (GBL § 756(1)).
The trap
Boss is the New York warning: the plaintiffs, New York residents suing on New York Labor Law wage-deduction claims, were held to a Minnesota forum clause, and the Court of Appeals affirmed dismissal even though the lower courts had found the plaintiffs by then time-barred in Minnesota; the Court's own opinion treats the plaintiffs' objection as one to the choice-of-LAW clause and says it should have been made to the Minnesota court, expressing 'no opinion on the merits' of the wage-deduction argument; it was Supreme Court, on reargument, that held the Minnesota time bar not the 'sort of grave difficulty and inconvenience' that would displace the clause. The thresholds are the other trap, and they differ: § 5-1401 (choice of law) starts at $250,000, while § 5-1402 (maintaining an action here against a foreign corporation or non-resident) requires $1,000,000 AND an express submission to New York jurisdiction, so a $500,000 contract can validly choose New York law without getting the statutory ticket into a New York court. § 5-1402(2) adds that "Nothing contained in this section shall be construed to affect the enforcement of any provision respecting choice of forum in any other contract", so missing the threshold is not itself a bar to enforcing the clause. And in a construction contract covered by GBL article 35-E, GBL § 757 says in terms that 'The following provisions of construction contracts shall be void and unenforceable', and § 757(1) is the clause that 'makes the contract subject to the laws of another state or that requires any litigation, arbitration or other dispute resolution proceeding arising from the contract to be conducted in another state' (material-supplier contracts excepted).
12 authorities
- statuteN.Y. GOB Law § 5-1402enactment date not established
The words that state the rule
1. Notwithstanding any act which limits or affects the right of a person to maintain an action or proceeding, including, but not limited to, paragraph (b) of section thirteen hundred fourteen of the business corporation law and subdivision two of section two hundred-b of the banking law, any person may maintain an action or proceeding against a foreign corporation, non-resident, or foreign state where the action or proceeding arises out of or relates to any contract, agreement or undertaking for which a choice of New York law has been made in whole or in part pursuant to section 5-1401 and which (a) is a contract, agreement or undertaking, contingent or otherwise, in consideration of, or relating to any obligation arising out of a transaction covering in the aggregate, not less than one million dollars, and (b) which contains a provision or provisions whereby such foreign corporation or non-resident agrees to submit to the jurisdiction of the courts of this state.
- statuteN.Y. GOB Law § 5-1402enactment date not established
The words that state the rule
2. Nothing contained in this section shall be construed to affect the enforcement of any provision respecting choice of forum in any other contract, agreement or undertaking.
- case6 N.Y.3d 242Boss v. American Express Financial Advisors, Inc.N.Y.decided 2006read it at the source ↗
The words that state the rule
Plaintiffs argument, however, is misdirected. The issue they raise is really one of choice of law, not choice of forum; it is the choice of law clause that, according to plaintiffs, may not be enforced. They say, in substance, that, since plaintiffs worked in New York, New York law must govern the deductions from their wages, even though the contract contains a Minnesota choice of law clause. We express no opinion on the merits of plaintiffs’ argument. It could and should have been made to a court in Minnesota— the forum the parties chose by contract. If New York’s interest in applying its own law to this transaction is as powerful as plaintiffs contend, we cannot assume that Minnesota courts would ignore it, any more than we would ignore the interests or policies of the State of Minnesota where they were implicated. In short, objections to a choice of law clause are not a warrant for failure to enforce a choice of forum clause. “Forum selection clauses are enforced because they provide certainty and predictability in the resolution of disputes” (see Brooke Group v JCH Syndicate 488, 87 NY2d 530, 534 [1996]).
- case6 N.Y.3d 242Boss v. American Express Financial Advisors, Inc.N.Y.decided 2006read it at the source ↗
The words that state the rule
The issue here is whether a forum selection clause requiring that any action be brought in Minnesota courts should be enforced. We agree with the Appellate Division that the forum selection clause is valid and affirm its order dismissing the action.
- case6 N.Y.3d 242Boss v. American Express Financial Advisors, Inc.N.Y.decided 2006read it at the source ↗
The words that state the rule
The three plaintiffs in this action, all of whom resided in the Syracuse, New York area, sue on behalf of themselves and the putative class action members who are similarly situated (see CPLR 901). At issue is whether the “expense allowance” paid by each advisor for the maintenance of office space and overhead expenses was a violation of the laws of New York State and requires that the matter be heard in New York State courts. The plaintiffs were all first-year financial advisors at the time that they signed their contracts with IDS Life Insurance Co. (IDS). Plaintiffs earned $2,000 per month and were required to pay $900 per month for expense allowances. These allowances covered all overhead expenses such as building rent and maintenance, office support staff, and office supplies, among other expenses. *245 In December 2002, plaintiffs filed suit in Supreme Court, New York County alleging a violation of Labor Law § 193 and 12 NYCRR 195.1.
- statuteN.Y. GBS Law § 757enactment date not established
The words that state the rule
§ 757. Void provisions. The following provisions of construction contracts shall be void and unenforceable: 1. A provision, covenant, clause or understanding in, collateral to or affecting a construction contract, with the exception of a contract with a material supplier, that makes the contract subject to the laws of another state or that requires any litigation, arbitration or other dispute resolution proceeding arising from the contract to be conducted in another state.
- statuteN.Y. GOB Law § 5-1401enactment date not established
The words that state the rule
The parties to any contract, agreement or undertaking, contingent or otherwise, in consideration of, or relating to any obligation arising out of a transaction covering in the aggregate not less than two hundred fifty thousand dollars, including a transaction otherwise covered by subsection (a) of section 1--301 of the uniform commercial code, may agree that the law of this state shall govern their rights and duties in whole or in part, whether or not such contract, agreement or undertaking bears a reasonable relation to this state.
- statuteN.Y. GOB Law § 5-1401enactment date not established
The words that state the rule
This section shall not apply to any contract, agreement or undertaking (a) for labor or personal services, (b) relating to any transaction for personal, family or household services, or (c) to the extent provided to the contrary in subsection (c) of section 1--301 of the uniform commercial code.
- statuteN.Y. GOB Law § 5-1401enactment date not established
The words that state the rule
2. Nothing contained in this section shall be construed to limit or deny the enforcement of any provision respecting choice of law in any other contract, agreement or undertaking.
- case6 N.Y.3d 242Boss v. American Express Financial Advisors, Inc.decided 2006read it at the source ↗
The words that state the rule
The Appellate Division affirmed, determining: “With respect to the forum-selection clause, plaintiffs specifically contracted to litigate their claim in Minnesota. Thus, they have not been deprived of a forum. Rather, they are time-barred from proceeding in the agreed-upon forum. The fact that New York provides a longer statute of limitations does not avail plaintiffs where they specifically agreed to proceed under Minnesota law.” ( 15 AD3d 306, 308 [2005].)
- case6 N.Y.3d 242Boss v. American Express Financial Advisors, Inc.N.Y.decided 2006read it at the source ↗
The words that state the rule
Supreme Court granted the motion to reargue in order to address the argument that the Minnesota statute of limitations had run and determined that the “statute of limitations” is not the “sort of grave difficulty and inconvenience” that should lead to the application of New York law
- statuteN.Y. GBS Law § 756enactment date not established
The words that state the rule
1. "Construction contract" means a written or oral agreement for the construction, reconstruction, alteration, maintenance, moving or demolition of any building, structure or improvement, or relating to the excavation of or other development or improvement to land, and where the aggregate cost of the construction project including all labor, services, materials and equipment to be furnished, equals or exceeds one hundred fifty thousand dollars. For the purposes of this article a construction contract shall not include any such contract made and awarded by the state, any public department, any public benefit corporation, any public corporation or official thereof, or a municipal corporation or official thereof for construction, reconstruction, alteration, repair, maintenance, moving or demolition of any public works project nor any contract with a contractor or subcontractor which is part of such project; or any such contract the purpose of which is the construction, reconstruction, alteration, repair, maintenance, moving or demolition of an individual one, two or three family residential dwelling or a residential tract development of one hundred or less one or two family dwellings, or any residential construction project where the aggregate size of such project is four thousand five hundred square feet or less, or any residential project of fewer than seventy-five units which receives financial assistance from the federal government, the state or a municipal entity designed for households earning an average of one hundred twenty-five percent of the housing and urban development agency area median income.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.