a. Rejected a motion to delete the section. Vote 4 - 9 (February, 1997).

b. Voted to adopt the term consumer and not "mass market" Vote: 8-5 (February, 1997)

c. Consensus that Draft should deal separately with arbitration clauses if at all. (February, 1997)

d. Rejected a motion to delete the section Vote: 10 -2 (Nov. 1997)

e. Applied the limitation on enforcement to all contracts. Vote: 7 - 3 (Nov. 1997)

1. General Rule. This section deals with choice of an exclusive judicial forum. It does not cover contract terms that permit litigation to be brought in a designated jurisdiction, but do not require that result. Permissive forum clauses are governed by general contract law. The Section deals only with judicial forum choices. Choices by contract of arbitration or other non-judicial forums are governed by other law and the provisions of this Section do not alter that pre-existing law.

This Section adopts the modern view of the enforceability of choice of forum clauses. That view was first stated in Bremen v. Zapata Offshore Co., 407 U.S. 1, 10 (1972) (choice of forum clauses are "prima facie valid"). Subsequent case law, both in the United States Supreme Court and in state courts, increasingly conforms to the presumptive enforceability of choice of forum clauses, whether in customized agreements or in standard forms.

2. Fairness Limitation. Concerns about fairness and notice may limit enforcement of the clause. This Section adopts the approach to such questions established in the Breman decision and followed in most modern decisions. Breman indicated that the contract term could be rejected if it was "unreasonable and unjust." See Perkins v. CCH Computax, Inc., 106 N.C. App. 210, 415 S.E.2d 755 (1992); Lauro Lines v. Chasser, 490 U.S. 495 (1989); Sterling Forest Assocs., Ltd. v. Barnett-Range Corp., 840 F.2d 249 (4th Cir. 1988). While some later courts phrase this in the disjunctive, the difference in terminology does not alter the general support for such clauses unless the primary or sole purpose is to obtain a grossly unfair advantage or to deny the other party its day in court without reason for the choice itself.

This section adopts the limiting language that has become the dominant theme in the case law. "Unjust and unreasonable" has become the dominant standard as many courts suggest that choice of forum clauses are presumptively enforceable. The intent in this section is to conform to Supreme Court and other holdings in reference to what type of limits on choice of forum are appropriate.

The section precludes clauses that choose an exclusive forum solely for the purpose of preventing a other party from being able to contest disputes that may arise under the transaction. Such choices may be unreasonable and their impact is unjust. On the other hand, clauses that serve valid commercial purposes are not invalidated simply because they adversely effect the other party to the agreement; this is true because the term to be a contract term must have been part of the contract itself.

3. Internet and Cyberspace. The importance of choice of forum provisions is recognized in general commerce, but is heightened in transactions in cyberspace as reflected by a line of contentious and inconsistent personal jurisdiction ruling. The cases on personal jurisdiction in this environment are split between those requiring active involvement in a state in order to find jurisdiction from Internet activity and those that hold a passive Internet use sufficient to confirm jurisdiction on all states to which Internet reaches. In this context, the importance of being able to delineate by contract the scope of exposure is commercially crucial. This was emphasized in a 1997 White House Report on Global Electronic Commerce.

In Internet transactions, choice of forum rules are ordinarily enforceable. The Supreme Court enforced a choice of forum in a standard form contract even though the choice effectively denied a consumer the ability to defend the contract and the choice was contained in a non-negotiated form and not presented to the consumer until after the tickets had been purchased. See Carnival Cruise Lines, Inc. v. Shute, 111 S.Ct. 1522 (1991). The Court's comments have relevance to Internet contracting:

In an Internet transaction, the context suggests that choice of forum will often be justified on the basis of the international risk that would otherwise exist and, certainly, choice of forum at a party's location is reasonable.