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Resolving Jurisdiction with Independent Contracts

Aug 23, 2008
Many are under the inherent assumption that all contracts are the same, and that if it's written down on paper, then the terms of the contract are clearly spelled out. Conversely, contracts aren't simply about written terms, and represent a greater significance that should be taken seriously. Contract law can often be confusing due to the involvement of independent contractors and contractor agreements. Without careful attention, these factors can complicate the contractual issues involved.

The lawyers who created the agreements we provide emphazied to us that contracts require acute attention to detail when independent contracts cross state or country borders. Determining the responsible party for specified parts of the contract can be an innately confusing matter. Therefore, it is essential to clarify the specifics within the contractor agreements. Understanding the laws and issues of jurisdiction is very beneficial during this process. I am not an attorney and do not offer legal advice, but below are some of the issues highlighted by our attorneys. (http://apps.leg.wa.gov/wac/default.aspx?cite=162-16-230)

What is Jurisdiction?

Jurisdiction refers to the district in which a particular contract ultimately has binding authority. Therefore, if two people live and work in one particular state, and then create an independent contract in that state, the jurisdiction for their contract would be in that state.

Jurisdiction becomes more of a complicated issue when contractor agreements start to cross state lines. Rules in place to deal with such issues vary from state to state. Because the rules vary so much, it's difficult to list each individual set. Thus, we'll take a general look at the issues and how they come into play. (http://apps.leg.wa.gov/wac/default.aspx?cite=162-16-230)

Keeping Jurisdiction in Mind

Although jurisdiction is a complex matter as applied to independent contracts, one main rule can always be utilized. Always get in writing which jurisdiction applies to which contract.

One of the most important factors in determining jurisdiction is the place in which the business transaction takes place. The place of transaction in vital for determining where the independent contract is binding. Therefore, the fact that the business transaction above took place in New Jersey may hold strong legal stance if the independent contract was taken into court. Indeed, by crossing the state line and deciding to do your business in another state, you may have already conceded jurisdiction.

Jurisdiction and Electronic Business

Further complication of jurisdiction has recently been coming from today's electronic business environment. Contract agreements are often now formed, and carried out over long distances through cyberspace. In these instances, it's no longer as simple as determining jurisdiction by where the transaction took place. Instead, resolving jurisdiction becomes even more complex because the business transaction takes place in two or more jurisdictions at the same time.

Due to these situations, it is almost always necessary to spell out specifically the jurisdiction of the contractor agreement or independent contract at the very beginning. As a result, some effort will have already been undertaken to resolve jurisdictional issues.

Despite the precautionary measures, location can still cause a problem. For example, if you routinely perform services for people in a certain state, it might be determined later that the jurisdiction of your business is in fact that state, even if services are rendered via the Internet.

Contract agreements can be tremendously complicated due to the complex nature of contract law. Keep these issues in mind when creating contractor agreements and impendent contracts that you enter into with your business. When in doubt always consult an attorney.
About the Author
James Cochran is the founder of ContractEdge, a provider of contract software designed specifically for IT professionals and contractors. Created by attorneys who specialize in Information Technology law, ContractEdge contractor agreements and legal contracts go beyond the standard IT contract provisions and include critical special provisions unique to the IT industry.
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