Remedies Code and numerous Texas statutes, mandating or permitting suit in specific
counties regardless of the dispute’s or the parties’ connection to a particular county.
Enforcement of venue-selection agreements therefore would permit parties to override the
convenience determinations of the Legislature, contrary to public policy.
What are the practical consequences of Texas’s differing treatment of forum- and venue-
selection clauses?
First, although contractual counterparties can take some comfort that their forum-selection
clause will be enforced, the same should not be assumed for venue-selection clauses. A
party assuming that the dispute will occur in the neutral or even favorable venue specified in
the agreement may find itself litigating elsewhere and at a disadvantage, with limited
options for transferring the case to the county specified in the agreement, absent unusual
inconvenience to the parties and witnesses. “Inconvenience” is given much less if any credit
now, with the horse and buggy days long gone. The result may be an unfavorable transfer
and a significant and adverse impact on the party’s interests.
Second, parties should be aware that for certain agreements, the Legislature has made
venue-selection clauses enforceable. Many Texas litigators are familiar with Section 15.020
of the Texas Civil Practice and Remedies Code, which has a special rule for “Major
Transactions.” For written contracts involving $1 million or more, the Legislature has made
venue mandatory in the county specified in the contract. That is, for high-value agreements
the Legislature has created a narrow exception to the general rule that venue-selection
clauses are not enforceable and made them enforceable.
So contractual counterparties to high-value agreements can take comfort that their venue-
selection clause will be enforced, right? Wrong. When the Legislature created Section
15.020’s exception for “Major Transactions,” it also created an exception to the exception.
Section 15.020 also says that it “does not apply” if “venue is established under a statute of
this state other than this title.” That is, if venue is established by any statute other than Title
2 of the Civil Practices and Remedies Code, the venue-selection clause is not enforceable,
even if the contract at issue involves $1 million or more. And there are dozens of Texas
statutes outside Title 2 of the Civil Practices and Remedies Code that have special venue
schemes. Yet another wrinkle is that Texas state courts will enforce a clause requiring a
non-Texas forum or venue, regardless of whether the transaction involves $1 million or
more.
The interplay between Texas’s common law on venue-selection clauses, the Legislature’s
special venue schemes, and the “Major Transaction” exception in the Civil Practices and
Remedies Code can inject significant uncertainty into the fundamental issue of where a
case will be tried. A party anticipating filing or defending a lawsuit in Texas involving a
contract must ask: Does the contract contain a venue-selection clause (as opposed to a
forum-selection clause)? If so, does it involve a “Major Transaction,” so that the clause is
enforceable? And even if it does involve a “Major Transaction,” is there some other Texas
statute that establishes venue, invalidating the contractual venue provision? Resolving this
complexity may be critical to securing a favorable venue (or avoiding an unfavorable one)
and significantly advancing the interests of the client.