Loan Documents Should Always Contain a Forum Selection Clause

 

             A New York creditor had an Oklahoma company debtor sign a credit application containing a consent to any litigation under the credit application taking place in New York.  The principal of the Oklahoma company, a resident of Oklahoma, signed a guaranty of the credit application that was silent as to the jurisdiction or venue to bring suit under the guaranty.  Based on the specific facts of the case, the New York court would not apply the forum selection clause in the credit application to the guaranty signed by the principal of the company.

 

             The lesson to be learned:  never assume anything.  If a creditor wants to control the location of any litigation, make certain that each and every loan document contains a forum selection clause.

 

The Commercial Lending Group at Lerch, Early & Brewer extends best wishes to all of our friends and clients this holiday season!