Unfortunately, the answer is probably yes. The standard for determining whether another state’s court system can have jurisdiction over you is whether you have minimum contact with the state in which you’re being sued (the forum state). If the court determines your contact with the forum state is so minimal that it would be unfair to subject you to the laws and courts of that state, then you may be able to get the case dismissed.
In the case, however, your contacts with the forum state are probably sufficient for the court to have jurisdiction as you signed a contract with a company in another state to receive supplies from that state. In order to benefit their own citizens, the laws of most states allow their courts to cast a very wide net in assuming jurisdiction over foreign citizens and companies. North Carolina courts will assume jurisdiction over foreign companies or people in all of the following instances: when the subject of the suit deals with a wrong committed in North Carolina, an injury or damage to a North Carolina resident caused by a foreign event, or when goods and services supplied from North Carolina (this is not an exclusive list). In fact, North Carolina law stretches so broadly that someone who has almost no contact with the state at all, but who is personally served while driving through the state on his way somewhere else will be subject to the jurisdiction of North Carolina courts. Given how easily commerce flows from one state to the next, and the hyper connectivity created by the internet, it is becoming more and more difficult to prevent being dragged into another state’s court.
Since it is so difficult and expensive to defend yourself in a foreign state, in addition to the possibility that a jury biased toward the local company will provide him with a literal home court advantage, it is advisable that any contract you sign with a party in another state has a choice of law clause and forum selection clause. A choice of law clause will designate which state’s laws will apply to any suit arising out of the contract. Since laws do vary from state to state, a choice of law clause is helpful.
A forum selection clause is critically important. This clause will allow you to prevent the situation described above (being forced to defend yourself in a courtroom all the way across the country) by designating which state any disputes under the contract must be resolved. A well-written forum selection clause will not apply only to suits filed in court, but also to disputes which are handled through arbitration or mediation. It will also have an express waiver of both parties’ right to object to the selected forum on the basis that it is not the most convenient forum considering all the circumstances
Both the choice of law and forum selection clauses will typically be enforced so long as they are reasonable. Generally as long as one of the parties to the contract does regular business or is headquartered in the state chosen, the courts will enforce that choice as reasonable. As long as you only do business in one state, your choice of law and forum selection clauses will almost certainly be enforced. Miller & Monroe has business lawyers that can review all of your vendor and supplier contract to ensure that you are adequately protected. Don’t wait until a dispute arises – save yourself time and money later on by having an experience business lawyer examine and revise your form contracts now.
The litigation process is difficult and expensive enough without having to travel. Contact the lawyers at Miller & Monroe today to review your contracts and ensure you have valid and enforceable choice of law and forum selection clauses. An ounce of prevention is worth a pound of cure.
Miller & Monroe is a civil litigation firm serving corporations, small businesses, and investors in the Raleigh, Durham, and Chapel Hill areas, and throughout the State of North Carolina. We offer big firm expertise with small firm rates and personal attention. We have extensive business experience having managed multimillion dollar budgets and dozens of employees. Whether it be resolving operational or financial challenges, navigating insurance issues, or managing growth, we know business. Using this experience, we will create a custom-tailored litigation plan to meet your unique business needs. When you hire Miller & Monroe, you get a business consultant and attorney for one reasonable price.
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