Proper Venue In a Breach Of Contract Lawsuit

When a contract dispute arises, one of the first questions is which county’s court should hear the case; this is called finding the proper venue. Venue simply means the county where a lawsuit can be filed and heard under the law. Under Code of Civil Procedure section 395(b), a breach-of-contract action may only be filed in:

1. The county where the contract in fact was entered into. The place of the making of a contract is where the last act necessary to the validity and binding effect thereof is performed. This “last act” is usually the acceptance of the offer. (Braunstein v. Superior Court (1964) 225 Cal.App.2d 691, 696, 37 Cal.Rptr. 666.) 

For example, in one case, although the lease stated that it was deemed to have been executed in Orange County, the court accepted the defendant’s declaration regarding the place where the lease was in fact signed and transferred the case to that county as the proper venue.

In determining venue, the legislature did not designate the proper county based on where the contract stated it was made or where the parties stipulated it was made; instead, it specified that the proper county is the one in which the contract was actually made.

2. The county where the contractual obligation was to be performed.The county where the obligation is incurred is the county where it is to be performed, unless there is a special contract in writing to the contrary.

3. The county where the defendant resides at the time the action begins.

Parties are free to include a venue selection clause in their contracts. But a venue selection clause in a contract is valid only to the extent it is consistent with CCP § 395. Alexander v Superior Court (2003) .The chosen county should be one where the contract was actually made, where it is to be performed, or where the defendant resides.

California courts have consistently held that the state’s venue statutes declare a fundamental public policy regarding the proper court for trial. As explained in Alexander v. Superior Court (2003),114 Cal.App.4th at 731 , an agreement that fixes a venue in some location other than that allowed by statute violates that policy.. The court further emphasized that any venue selection clause that disrupts statutory venue provisions is void as against the legislatively declared public policy establishing the proper place for trial. 

If an action is filed in an improper venue, the court may, upon the defendant’s motion, order the case transferred to the proper venue. Any provision in the contract that designates a location inconsistent with the venue statutes does not prevent such transfer.

To avoid unnecessary disputes and venue challenges, businesses and individuals should review venue clauses carefully before signing.  If a case is filed in the wrong county, the court can transfer it and may require the responsible party to pay the associated costs under CCP.

In short, California law affords parties some flexibility in designating venue, but this flexibility is limited by public policy. Choosing a county that truly connects to the contract ensures that your agreement is both enforceable and efficient if litigation ever arises.

FAQ

Q1: What is the proper venue for a breach of contract lawsuit in California?

Under CCP §395, venue is proper where the contract was made, where it was to be performed, or where the defendant resides when the lawsuit begins.

Q2: Does a venue selection clause always control?

No. Venue clauses are enforceable only if they comply with California’s statutory venue rules and public policy.

Q3: Where is a contract considered “made” for venue purposes?

It is the county where the last act necessary to form the contract—usually acceptance—occurred.

Q4: What happens if a lawsuit is filed in the wrong county?

The defendant may file a motion to transfer venue, and the court may order the case moved to the proper county.

Q5: Can the court order payment of transfer costs?

Yes. If a party files in an improper venue, the court may require that party to pay costs associated with the transfer.