Governing Law; Dispute Resolution

While lawsuits between database licensors and library licensees are rare, it is nonetheless wise to consider how to resolve disputes. Dispute resolution provisions address whether the parties will try arbitration or mediation instead of law suits in a court.

Governing law and venue provisions allow the parties to decide ahead of time what state’s law will govern interpretation of the contract and where suits must be filed.

Governing law is particularly relevant in disputes. Because parties (and their lawyers) are more familiar with the laws of their home state, parties usually want their state’s law to apply to any dispute involving the agreement. For libraries that are part of a state institution (for example, the University of Texas System component institutions), there may be compelling reasons to insist that the institution’s state law applies. State institutions may be constrained or benefited by their state’s laws. If another state’s law governs the contract, a state institution may be stripped of special defenses under its own law. Example 2 illustrates a compromise to preserve special defenses available to a state institution regarding its indemnification obligations (if it has any) while agreeing in general to be bound by another state’s law.

Sometimes parties also plan for the effect a dispute will have on continued access to licensed materials. For example, the parties could provide that “in the event of a dispute, the licensee will pay its fees into an escrow account pending resolution of the dispute in exchange for continued service.” Licensees should not hesitate to add language, in plain English, that gives them the rights they need.

Example Clauses

Last updated: April 25, 2012

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