So what is a jurisdiction?
Jurisdiction appears in almost every contract or terms and conditions I draft for my clients. I find that people often don’t understand what it means and how it affects dispute resolutions for your business.
Jurisdiction refers to the reach of the law in which your business operates. It’s the power of the laws operating in the area where you’re carrying out your business.
Your business is registered in a certain state or country. In Australia, it’s the state you’re living in.
You register your ABN and you provide the address for your business in the state you live in. It’s the laws of that state that apply to your business.
That is what is known as jurisdiction.
Why you need your jurisdiction in your business terms and conditions
In case of a dispute, when you need clarity on how to proceed on the matter, it’s important that you know what jurisdiction applies. You need to look at the laws in your jurisdiction because they are the ones that will apply.
However, when you are dealing with someone who didn’t agree to that in the contract, you will more than likely have to look at that resolution within the bounds of the jurisdiction of the other person.
This can be especially problematic if the other person is in a different state or even a different country.
When doing business with people from a different state or country, ensure that you state very clearly the jurisdiction that will apply to the terms and conditions for any disputes.
For example, if your business is in Queensland, then you would state, in your terms and conditions and your service agreements that the last of Queensland, Australia will apply.
Be upfront and clear about this because this will determine where any disputes will be resolved.
If this is not stated in your contract and you happen to have a dispute with someone from another state or country, you will likely have to incur costs such as travel to get the matter resolved.
Even mediations are held in the jurisdiction they fall under.
Taking this one step further, you need to understand the Consumer Law and any special law that applies to your jurisdiction and your business. Make sure that they are also reflected in your business terms and conditions.
All your legal documents link together. It’s good practice to ensure that you cover jurisdiction in all of them.
This is especially important when your business is online and your services are offered across the world. You will have some local clients but you will more than likely have international clients as well.
When I draft legal documents for my clients, I do a lot of research to establish what laws apply in the jurisdiction they are in. I do this to ensure that their business complies with the laws under which they are operating.