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Plaintiff and defendant sign a contract. Plaintiff then sues defendant in say, New York state, for breach of contract. Defendant (a corporation) claims it never did business in New York state, and that the New York court does not have jurisdiction. This is literally true because defendant did not perform its obligations under the contract. Had the defendant performed those obligations, it would have done business in New York. The contract does say that it will be governed by New York law, but does not specify that disputes must be litigated in New York.

The plaintiff is domiciled in New York and the contract was signed in New York. The defendant is a foreign company. Let's say that the contract is for delivery of imported goods at New York harbor.

Can such a plea hold up? Or is it a case of "unclean hands'?

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No, New York would have jurisdiction.

NY CPLR § 302 (2012) (New York's "long-arm statute") states that:

As to a cause of action arising from any of the acts enumerated in this section, a court may exercise personal jurisdiction over any non-domiciliary, or his executor or administrator, who in person or through an agent:

  1. transacts any business within the state or contracts anywhere to supply goods or services in the state ...

The Supreme Court has upheld a similar long-arm statute (giving Florida jurisdiction over anyone breaching a contract within the state) in Burger King v. Rudzewicz, stating that:

A forum may assert specific jurisdiction over a nonresident defendant where an alleged injury arises out of or relates to actions by the defendant himself that are purposeful [sic] directed toward forum residents, and where jurisdiction would not otherwise offend "fair play and substantial justice."

This would appear to fall under that reasoning: the defendant purposefully signed a contract in New York with a New York company to do business in New York, and litigating the case where they'd agreed to do business, but failed to, would hardly offend fair play or substantial justice.

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  • Would this still apply if contract is signed with a subsidiary based in say Singapore ? – ask Jan 13 at 9:02
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    I believe so. The fact that it's a far-away foreign company is relevant under Asahi Metal Industry Co. v. Superior Court, in which jurisdiction was not found, but also the act of signing a contract to do business in New York is a lot more deliberate than selling products that might eventually end up in California. – Ryan M Jan 13 at 9:08
  • Intersesting especially for those who license patents to these states. – ask Jan 13 at 11:50

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