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November 20, 2019

No Deal: Appeals Court Strikes Champertous Contract

American Bar Association

The Minnesota Court of Appeals, for the second time in three years, has held that forum selection clauses and choice-of-law provisions do not trump a state's policy against champertous contracts. Donald Pocock, a partner for Nelson Mullins in Raleigh and co-chair of the American Bar Association's (ABA) Consumer Litigation Committee, spoke with the ABA about the implications of this decision.

The fate of champertous contracts are determined state by state, which means this decision could affect those who do business across state lines. "For example, some credit card issuers include choice-of-law clauses in the home state of the card issuer such as Nevada or South Dakota, and their cardholder agreements are drafted specifically with those jurisdictions in mind. Under the logic of Maslowski, choice-of-law clauses could be at risk of not being enforced,” Pocock says.

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