The use of standard form terms and conditions, without a signed contract, often leads to disputes over whether the parties actually agreed to be bound by such terms and conditions, as was the case in Shelter Mutual Insurance Co. v. Rimkus Consulting Group, Inc. of Louisiana, et al., 2013-1977 (La. 7/1/14). In that case, an expert witness (“Rimkus”) was retained to assist a corporation (“Shelter”) in connection with certain litigation. In its letter to Shelter confirming the engagement, Rimkus indicated its services were subject to its Terms and Conditions attached to the letter. The Terms and Conditions included a forum selection clause requiring venue for any suits arising out of the contract to be in Harris County, Texas. When a dispute arose, Shelter filed suit against Rimkus in Louisiana, claiming the Terms and Conditions were not binding on it and, in any case, the forum selection clause was void as against public policy.
In response to Shelter’s argument that it never agreed to the unilateral Terms and Conditions, the Louisiana Supreme Court examined the course of conduct between the parties, noting that the Terms and Conditions were attached to Rimkus’ confirmation letter; Shelter had previously retained Rimkus numerous times and the same Terms and Conditions were routinely provided as part of its job acceptance; on three prior occasions, the same counsel for Shelter expressly accepted these Terms and Conditions; until this suit was filed, Shelter had never objected to the Terms and Conditions; and the parties acted in accordance with the Terms and Conditions relative to billing and payments during the job assignment. These facts led the court to conclude that the Terms and Conditions were indeed applicable and binding on the parties.
Another important aspect of the case is the Louisiana Supreme Court’s ruling that forum selection clauses are generally enforceable and are not per se violative of public policy in Louisiana. Historically, Louisiana courts have followed the lead of the U.S. Supreme Court in holding that such clauses are generally legal and binding, absent proof that enforcement would be unreasonable and unjust, or against public policy. The court noted, however, that a recent split in the Louisiana circuits was created when the Louisiana Third Circuit Court of Appeal in Thompson Tree & Spraying Serv., Inc. v. White–Spunner Const., Inc., 10–1187 (La.App. 3 Cir. 6/1/11); 68 So.3d 1142, writ denied, 11–1417 (La.9/30/11); 71 So.3d 290, held that such clauses are unenforceable because they violate the Louisiana Code of Civil Procedure and Louisiana public policy.
The Louisiana Supreme Court rejected Thompson Tree, explaining that the Louisiana legislature has restricted forum selection clauses only with respect to very specific types of contracts (such as certain construction contracts and non-compete agreements) and claims (unfair trade practices). Absent applicability of such specific statutes, the court held that forum selection clauses should be enforced in Louisiana unless the resisting party can “‘clearly show that enforcement would be unreasonable and unjust, or that the clause was invalid for such reasons as fraud or overreaching …. [or that] enforcement would contravene a strong public policy of the forum in which suit is brought, whether declared by statute or by judicial decision.’” Id. at 10.
This ruling by the Louisiana Supreme Court puts to bed generic “public policy” arguments against forum selection clauses. And it provides good insight into how “course of conduct” can render un-signed terms and conditions binding on the parties. A better practice is to have terms and conditions signed or formally acknowledged in some manner, if the parties intend to be bound by them.