When a business based in Colorado enters into a contract with a business based in another state, it is common for the contract to include a “venue provision,” stating in which state’s courts any controversy arising out of the contract will be tried. In general, the venue provision will be enforced by Colorado courts in the following three circumstances:
(1)Where the provision is not contrary to an established public policy
of Colorado, whether the policy arises by statute or judicial decision,
such as, for example, where a Colorado statute upon which the claim is
at least partially based specifically mandates where venue must lie.
(2) Where the forum selection clause is not unfair or unreasonable or
the result of overreaching by one party. The clause may be deemed unreasonable
where, for example, the party seeking to escape the provision can show
that trial in the contractual forum will be so gravely difficult and inconvenient
that he will for all practical purposes be deprived of his day in court.
Mere inconvenience or additional expense is not the test of unreasonableness.
(3) Where the venue clause can contain “boilerplate” or standard
language used in similar contracts, where the venue clause is in standard
size font in an easily readable contract of, for example, only a couple of pages.
The fact that the contract is the result of an arm’s length transaction
between parties having business experience tends to negate any claim of
overreaching by the party seeking to enforce the venue provision.
The bottom line is that the inclusion of a venue provision can be construed
by the courts as a reasonable effort by the parties to bring certainty
to the transaction in advance.
This article is for general informational purpose only. Nothing in this
article should be considered as legal advice to any reader or other person,
nor shall it be deemed to establish an attorney-client relationship with
any person or legal entity.
[Source: Adams Reload, Inc. v. International Profit Associates, Inc.,
143 P.3d 1056, (Colo.Ct.App. 2005), cert. denied, 2006 WL 2796636 (Colo. 2006)]