CA Supreme Court: Forum Clause Unenforceable Under Song-Beverly Act

The California Supreme Court, in a decision concerning the Song-Beverly Consumer Warranty Act, has declared that forum selection clauses requiring consumers to litigate disputes outside of California are unenforceable. The court reasoned that such clauses violate the Act's intent to protect California consumers by making it prohibitively expensive and inconvenient for them to pursue claims. This ruling specifically addresses contracts governed by California law and impacts businesses that include such clauses in their consumer agreements.

Businesses that contract with California consumers must review and revise their standard form contracts to remove or amend forum selection clauses that mandate out-of-state litigation. Failure to comply could result in these clauses being deemed void and unenforceable, potentially leading to increased litigation costs and challenges in defending claims. Companies should consult with legal counsel to ensure their contracts align with this ruling and to understand the implications for dispute resolution with California consumers.