Floating Forum Selection Clauses

Most forum selection clauses refer specifically to the courts of a particular jurisdiction. Floating forum selection clauses are different.  A floating clause does not reference any court by name. Instead, it ties the choice of forum to a mutable fact that can change after the contract is made. The possibility that the identity of the chosen forum can change between the time of signing and the time of litigation explains why these provisions are described as “floating.”

This post first explains why a company might choose to write a floating forum selection clause into its contracts. It then examines when … Read more

When Forum Selection Clauses Bind Non-Signatories

When a company signs a contract containing a forum selection clause, it is clearly bound by that provision.  But what about its parent company?  Its subsidiaries?  Its affiliates?  Are these non-parties likewise bound by the forum selection clause?

The answer to this question, as it turns out, is surprisingly complex.  On the one hand, it is a well-established principle of contract law that a party may not be bound by an agreement without its consent.  On the other hand, the courts have over the years recognized a number of doctrines – including the law of third-party beneficiaries, equitable estoppel, agency, … Read more

A Short History of the Choice-of-Law Clause

The choice-of-law clause is now omnipresent.  A recent study found that these clauses can be found in 75 percent of material agreements executed by large public companies in the United States.  The popularity of such clauses in contemporary practice raises several questions.  When did choice-of-law clauses first appear?  Have they always been popular?  Has the manner in which they are drafted changed over time?  Surprisingly, the existing literature provides few answers.

In a recent paper, A Short History of the Choice-of-Law Clause, I tried to answer some of these questions.  The paper sought, among other things, to determine the … Read more

Altering Rules, Cumulative Voting, and Venture Capital

Until 1870, corporate elections in the United States were generally conducted under a system of straight voting. In that year, the State of Illinois adopted a new constitution requiring that cumulative voting be used to elect directors to the boards of Illinois corporations. Over the next eighty years, a number of states followed suit and adopted laws mandating the use of cumulative voting in corporate elections. As one scholar has written:

The high water mark of mandatory cumulative voting as a force in American corporate law was probably the late 1940s. At that point, twenty-two states had mandatory provisions. The … Read more

Contractual Innovation in Venture Capital: How the Rise of Cloud Computing Disrupted the Way Start-up Technology Companies are Financed

The following post comes to us from John F. Coyle, Assistant Professor of Law at the University of North Carolina at Chapel Hill, and Joseph M. Green, Associate at Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP in New York, and is based on their forthcoming article in the Hastings Law Journal, “Contractual Innovation in Venture Capital.” The full paper is available here.

How do the investment contracts used by venture capitalists today differ from those used in the past? Our forthcoming article in the Hastings Law Journal offers a partial answer to this question. Drawing upon interviews with … Read more