What Is a Venue or Forum Clause in an MCA Contract?
A venue or forum selection clause names the state and court where lawsuits under the contract have to be filed. In many MCA contracts it's the funder's home state, which means a dispute ends up heard far from where your business operates.
Where do you find the venue clause?
Look near the end of the contract, in a section called governing law, jurisdiction, venue or forum. It usually reads something like this: any action shall be brought in the courts of a named state and county. It often sits next to a governing law clause that says which state's law applies to the contract.
How is governing law different from venue?
These are two separate things. Governing law says which state's rules decide the dispute. Venue says where the case is heard. A contract can choose one state for both, or different states for each. Many funders pick their home state for both, because they're familiar with its courts and law.
Why does the venue clause matter to you?
If a dispute goes to court in another state, you face travel, an out of state attorney and a court you don't know. That raises the cost of defending yourself or bringing a claim. Knowing the venue up front helps you weigh the risk of a dispute before you sign.
Is a venue clause enforceable?
Courts generally enforce forum selection clauses in business contracts, though there are limits, and the rules differ from place to place. Some states have their own rules for certain kinds of contracts. This is general information, not legal advice, and if you're facing a dispute, talk to an attorney licensed where the case is filed.
What if the contract also has arbitration?
Some contracts send most disputes to arbitration and use the venue clause only for things like enforcing an award. Read both sections together to understand where a dispute really ends up.
Why do funders choose their home state?
Funders operate in one place and deal with merchants across the country. Picking one venue lets them work with the same courts and attorneys every time, which lowers their costs. For you, it's a trade off to understand, not a reason to panic, since most advances end without any dispute at all.
What happens when a dispute comes up?
If you're served with a lawsuit filed in another state, don't ignore it. Deadlines to respond are short. Contact an attorney licensed in that state quickly, and gather your contract and statements before the first call.
How can Afterfirst help with this?
When we bring you offers, we'll point out where each contract says disputes are heard. If two offers are close on price and one names a venue nearer to you, that's a reasonable tiebreaker. Call 877-FUND-654 to go over it.
What else do owners ask about this?
- What does an arbitration clause in an MCA mean?
- Can I get an MCA if I live in a different state than my business?
- What does a jury trial waiver in an MCA mean?
More short answers on this topic are on the offers and contracts FAQ, and the MCA offer comparison runs the numbers for your own file.
Have a question we didn't answer?
Ask us on the call. Call 877-FUND-654 with any question. We call you back, usually the same business day, and we always talk with you before we shop your file.