Beware the Boilerplate: Conflicting Forum-Selection Clauses in Layered Contracts

The strategic, financial, and practical impact of being forced to litigate in an inconvenient forum make it crucial that parties are aware of and consider the implications of forum selection clauses in the contracts they sign.[1]  This can be easier said than done, however, particularly where the contact is multi-layered, with different forum-selection clauses being agreed to at different times, or where forum-selection clauses are buried in click-through agreements, which many parties never discuss or even read.  A recent case from the Washington Court of Appeals illustrates this point.

In West Consultants, Inc. v. Davis,[2] the plaintiff (“West”) purchased Deltek software and a maintenance plan from defendant A & E.[3]  The purchase agreement included choice-of-law (Washington) and forum-selection (King County) provisions.  The purchase agreement also stated that no software warranties were being given by A & E and West should look solely to Deltek for such warranties.

West then purchased installation, training and support services from Deltek.  West signed a Deltek software-installation work order that stated that it was subject to the terms of a separate license agreement with Deltek.  This separate license agreement had a Virginia forum-selection clause, certain express warranties, and disclaimed all implied warranties.[4]  To complete the Deltek software-installation process, a West employee accepted Deltek’s license agreement by clicking through a series of buttons on his computer.

West subsequently filed suit against Deltek and A & E in King County Superior Court alleging that the software did not meet its needs.  The trial court granted Deltek’s motion to dismiss for improper venue and awarded fees and costs against West related to the motion.[5]

On appeal, West argued that A & E and Deltek were partners and the A & E purchase agreement establishing venue in King County bound Deltek.  West argued that the forum-selection clause in the Deltek license agreement was thus an unenforceable attempt to modify the purchase agreement without consideration.  As a result, West claimed that A & E’s purchase agreement should control venue, even though West’s claims against Deltek arose out of the warranties in the Deltek license agreement. 

The Court of Appeals disagreed, holding that the second agreement was not an attempt to force a new agreement on West without consideration but instead formed a single layered contract.  Because West’s claims related to the warranties in the Deltek license agreement, they were governed by the Deltek forum-selection clause.

Nor was the appellate court receptive to West’s claim that it agreed to the Deltek license agreement without reading it:  It is not necessary to actually read an agreement to be bound by it, and West assented to these terms by using the software.[6]

West highlights the importance of carefully reading and considering forum selection clauses even when buried in click-through agreements.  Being forced to litigate in another forum can be far more expensive and may limit the relief to which parties would otherwise be entitled to under Washington law.