Caspi v. The Microsoft Network

323 N.J. Super. 118, 732 A.2d 528 (Super. Ct. App. Div. 1999)

 

RULE:

Generally, forum selection clauses are prima facie valid and enforceable in New Jersey. New Jersey courts will decline to enforce a clause only if it fits into one of three exceptions to the general rule: (1) the clause is a result of fraud or "overweening" bargaining power; (2) enforcement would violate the strong public policy of New Jersey; or (3) enforcement would seriously inconvenience trial. The burden falls on the party objecting to enforcement to show that the clause in question fits within one of these exceptions. 

FACTS:


Plaintiff members of defendants' on-line computer service filed suit for breach of contract, common law fraud, and consumer fraud. Before becoming a member of defendants' service, a prospective subscriber was required to agree to the terms of the membership agreement, which contained a forum selection clause. Members were required to click either "I agree" or "I don't agree" to the membership agreement. A potential subscriber could only use defendants' services after clicking "I agree." Defendant's filed a motion to dismiss, which the court granted. On appeal, the court affirmed. 

 



ISSUE:

Was the case properly dismissed for lack of jurisdiction and improper venue?

ANSWER:

Yes.

CONCLUSION:

Affirming the decision of the lower court granting defendant's motion to dismiss the complaint for lack of jurisdiction, the court held that plaintiffs failed to meet any of the exceptions to the general rule that forum selection clauses were prima facie valid and enforceable. Because plaintiffs were not subject to overwhelming bargaining power, where there were several competitors in the provision of on-line services, and because enforcement of the clause would not violate the strong public policy of New Jersey and would not seriously inconvenience trial, the court agreed that clause was enforceable.

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