Contracts often include agreements stating how litigation will be handled in the event the parties have a dispute. These agreements sometimes include “choice of law” and “forum selection” provisions. In a choice of law provision, the parties specify that the contract will be interpreted according to the law of a particular state. In a forum selection clause, the parties specify the State—and sometimes the specific county—in which disputes will be filed.
These provisions generally are valid in North Carolina, but our courts have declined to enforce them in some specific circumstances. This summer the General Assembly created a new Chapter 1G that attempts to remove these limits when parties choose North Carolina as the forum state and North Carolina law as the applicable law. The new legislation only affects provisions included in business contracts. It defines a “business contract” as “a contract or undertaking, contingent or otherwise, entered into primarily for business or commercial purposes,” and it explicitly excludes “employment contracts” and “consumer contracts.” See 1G-2(1), -5(1). Chapter 1G became effective June 26, 2017 and it applies to business contracts entered into before, on, or after that date. These are the main effects of Chapter 1G: Continue Reading