Personal Jurisdiction Term in Contracts

Although I'm not quite as available to do contract reviews as I was when on the ASJA Contracts Committee, I still do a few. A recent one presented something I had never before seen: personal jurisdiction.

I just looked up the phrase "personal jurisdiction" on Lectlaw.com (a free legal dictionary). Here's what it says:

If the court is being asked to determine any defendant's rights or obligations, it must have the power to make orders concerning the individual defendant. This is called personal jurisdiction. Personal jurisdiction is also called "in personam jurisdiction."

For a court to have personal jurisdiction over a defendant, the defendant must have been personally served (or have accepted service of the court papers) and the defendant must have at least some contacts with the state in which the court is located. No set number qualifies as the minimum; each situation must be analyzed case by case. If the defendant lives out of state, the court must look at the defendant's contacts with the state. Going into a state regularly to conduct business is usually sufficient for the court to obtain jurisdiction; sending child support payments to a state, without actually visiting the state, however, is not.

That explains why a publisher might use the phrase: if both parties agree to personal jurisdiction, it makes it difficult for you to take legal action if and when necessary.

First, you have to pay to have the publisher personally served if you’re suing them for anything, like not getting paid. Next, the publisher will argue that it doesn't go into your home state so that you’d have to go to its state to seek your money. This is far more expensive than suing in your own backyard (which is potentially expensive for the publisher). Usually when a company wants to try for this sort of restriction, it asks for you to agree to legal jurisdiction on its home grounds. (The contract may use the word jurisdiction or might use something that is equivalent, like agreeing that any legal disputes will take place in a specific city, county, or state.)

Using personal jurisdiction is the most backhanded way I’ve seen this pursued. My personal take is that if I think a publisher is trying to sneak one past me, I also assume it will try to sneak other things by, and I walk away and seek better business partners.