Understanding "Forum-Selection Clauses" in South Dakota

Forum-Selection Clauses in South Dakota

A forum-selection clause is a contract element that allows the parties to agree that any lawsuits resulting from that contract will be initiated in a specific forum.

In South Dakota, our Supreme Court has found on numerous occasions that parties “may contractually specify and consent to a state's jurisdiction over legal actions which arise under a contract.” O’Neill Farms, Inc. v. Reinert, 2010 SD 25, 780 N.W.2d 58.  Furthermore, “forum-selection clauses are prima facie valid and should be enforced unless enforcement is shown by the resisting party to be unreasonable under the circumstances.” Klenz v. AVI Intern., 2002 SD 72, 647 N.W.2d 734. The burden is on the resisting party to make a strong showing that enforcement would be unreasonable and unjust, or that the clause was invalid for such reasons as fraud or overreaching.

In reviewing a forum-selection clause, South Dakota courts consider these six factors:

  1. The law which governs the formation and construction of the contract;
  2. The residency of the parties;
  3. The place of execution and/or performance of the contract;
  4. The location of the parties and the witnesses probably involved in the litigation;
  5. The availability of remedies in the designated forum; and
  6. Whether the drafter “has a special interest in limiting the fora in which it potentially could be subject to suit.”
Scott Swier
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