Web Agreements - The Touchy Jurisdiction Issue

Making money on the web is often all about forming business relationships. At its core, this is exactly what an affiliate program is - two parties hooking up to make money. When such relationships are formed, however, there are legal implications that need to be considered. One is the issue of jurisdiction. Let's take a closer look at it.

What is jurisdiction? It is simply a statement of authority. More specifically, it is a statement of who has authority over something. Let's consider a simple example. I drive to Las Vegas every so often from San Diego. My foot has been known to slip for extended periods of time on the four hour drive. If an officer of the law sees me while this is happening, he will write me a ticket. Ah, but what if it is a California Highway Patrol man and I am just heading into Nevada? He has no jurisdiction in Nevada, so he can't write me a ticket once I cross the state line driving like a bat out of hell...err, slightly over the speed limit. Of course, the Nevada police can then write me a ticket!

So, what does jurisdiction have to do with online business relationships? The answer is simple. The parties need to select where any disputes will be handled. Let's look at another example. Assume I am a web marketer and located in San Diego. Further assume you are the owner of a site that my traffic would be perfect for and generate a lot of money for both of us. You are located in New York.

What if a dispute arises between us? Where will the arbitration or court hearing be held? Should it be in New York or in San Diego? The cost for one party to travel to the other location is obviously significant. Furthermore, the laws in each state are significantly different, which means one party is going to have to hire and pay for local counsel. In short, this simple issue quickly becomes a complex one.

What is the best answer? There really isn't one. It is a point of negotiation. Some parties will use it as leverage to get what they want on another point, but deals have actually fallen apart on this issue many times. If you are entering into a business relationship with another party online, make sure you address it.

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