Thomas Molony continues "Business Law Developments" series in N.C. Bar Association publication
Elon Law professor Thomas Molony analyzed three recent rulings of the North Carolina Court of Appeals and four from the North Carolina Business Court for the "Business Law Developments" series in the February 2010 edition of "Notes Bearing Interest," a quarterly publication of the N.C. Bar Association.
Molony’s publication is part of a series of reports he has done in the past with Elon Law professor Andy Haile.
In Molony's review of Speedway Motorsports Int’l Ltd. v. Bronwen Energy Trading, Ltd., a case decided by the N.C. Business Court, Molony addressed how Speedway Motorsports serves as a good reminder that, for contracts not entered into in North Carolina, a choice of forum clause designating a foreign forum generally is enforceable under North Carolina law.
Drawing on previous appellate rulings, the court determined that such a clause is valid unless “compelling reasons dictate otherwise.” Molony noted that for contracts entered into in North Carolina, N.C. Gen. Stat. § 22B-3 generally voids clauses designating venue in another state. However, according to the court, the statute did not apply in this case because the parties did not claim that the agreements were entered into in North Carolina. Therefore, based on previous court decisions, the forum selection clauses in the Swift/Bronwen agreements were valid.
Molony also reviewed Self-Help Ventures Fund v. Custom Finish, LLC, a case decided by the N.C. Court of Appeals. In Self-Help Ventures Fund, the Court of Appeals protected an assignee of a note who, for unstated reasons, failed to have associated guarantees assigned to it. Molony explained that, “Although the court concluded that mere assignment of the note effected an assignment of the guarantees, it appears that the court could have based its decision solely on the terms of the note and the guarantees. Consequently, practitioners would be well-advised to continue to insist on specific assignment of guarantee agreements when a note is purchased and to rely on the Self-Help Ventures.”