Given enough time, every business will likely face litigation, or at least, a breach of contract lawsuit. And, when this happens, businesses often look to their choice-of-law and venue clauses to limit their liability as they get to choose where the dispute is heard. But, are these enforceable?
A choice-of-law clause is the sentence in your contract that says which state’s substantive law will govern any dispute (e.g., New York law governs). The venue clause is different: it tries to fix where in Texas a lawsuit must be filed (the county). If you want to steer cases to a different state or court system, use a separate forum-selection clause rather than relying on venue language.
Forum versus venue (do not mix them up)
Forum-selection (e.g., New York courts) is presumptively valid and enforceable. Mandamus is available in Texas state courts, and federal courts also favor the parties chosen forum.
Venue-selection (e.g., Harris County, Texas) generally cannot override Texas’ mandatory-venue rules, unless the deal is a Texas Civil Practice, Section 15.020, “major transaction” (a transaction work at least a million dollars) or another statute expressly allows venue by agreement.
Our state’s courts broadly enforce forum-selection clauses, but venue-selection within Texas counties is limited unless the contract qualifies as a “major transaction” (or another statute permits venue by agreement). Choice-of-law clauses are respected unless they conflict with a fundamental policy and Texas has a materially greater interest.
The contract checklist
Use separate clauses: one for forum, one for Texas county venue (only if Section 15.020 applies) and one for choice of law. Confirm the transaction meets Section 15.020’s million-dollar threshold and check carve-outs (e.g., other mandatory venue statutes). Align arbitration, jury-trial waivers, injunctive-relief carve-outs and service-of-process provisions with your chosen forum. Finally, for multi-state deals, model outcomes under the chosen law and under Texas law to assess risk before signing.