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Up in Arms

Prepare for litigation with these weapons of mass discussion.

This story appears in the January 2005 issue of Entrepreneur. Subscribe »

Planning for possible litigation is one of the mostuncomfortable issues in business negotiation. Many contract clausesare designed to give one side superior firepower in court.Here's the standard arsenal:

  • Service ofprocess: This is a fancy term for the formal notice you owethe other side before you haul it into court. The rules aretechnical and bear directly on a court's legal authority todecide a case. So if your adversary is the type to hide when theprocess server comes a-knockin', you may have a problem. Aservice of process clause designates a "who" and"how" for service, and gets your lawsuit off on the rightfoot.
  • Choice of lawforum: When one side is from Maine, and the other is fromArizona, and they're building in Iowa with materials fromAlaska, where do you sue? Choice of forum clauses set out whichcourt the parties will use, and a choice of law clause specifieswhich state's laws will apply. When used effectively, theseclauses start you off with the court and body of law most favorableto you.

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