Stating in a Contract Where It’s Being Entered Into

Usually, where one or more parties happen to be on signing a contract should have no bearing on that contract. It might be relevant for purposes of determining the governing law, but only if you fail to include a governing-law provision.

So a general matter, nothing is accomplished by stating—whether in the introductory clause, in the signature blocks, or elsewhere—where one or more signatories happen to be when they sign the contract.

But at a recent seminar in Europe, one of the participants said that under the law of a country that has now slipped my mind (Portugal? Italy?), where the parties enter into a contract can have tax implications.

I’d like to know more about that or any other circumstances where it makes sense to state where the contract is being entered into.

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.

9 thoughts on “Stating in a Contract Where It’s Being Entered Into”

    • I think Florida used to have a documentary stamp tax too.

      And before I went in-house, a partner at my firm swore that venue/jurisdiction could be affected by the last place of signature. So his contracts always had a “signed in” statement. I never bothered to research that, though.

    • Also India being a Federal Structure, each state has different stamp duty laws making the implications onerous. For the same contract the stamp duty may vary between USD 1 to USD 10,000.

  1. I come across this mainly in contracts drafted in civil code countries, where the city of signing is stated. My guess is that it has something to do with having regional Bars and regional courts within a jurisdiction.

    On stamp duty, this was an issue in uk ip agreements until 2000, but it didn’t result in stating where the contract was signed. Quite the opposite, as duty was only payable If the document entered the uk, so one tended not to want to say where it was signed.

  2. So I ran into a novel tax/location issue the other day. Sending mail in the US apparently creates tax liability. And it doesn’t matter what you say in the contract, the tax liability comes as a result of the physical location of where the mail is sent from and sent to. The tax is based on the cost of preparing the mail piece itself.

    As a result, direct mail reports are now de rigeur for AP and tax departments for anyone sending things like invoices or other mail via a third party.

  3. 1. Venue possibilities: Entering into a contract in Location X will often mean that suit can properly be brought in Location X (absent an exclusive-choice-of-forum clause in the contract). =Reciting= that the contract is signed in Location X makes it that much easier to prove the suitability of the venue. (My guess is that this usually won’t be a big factor, because Location X likely will already be a proper forum by virtue of its being a place of business of one or both parties.)

    2. Sales tax (U.S.): A seller might want to document that it signed a contract to sell goods in its own state, so as to reduce the odds of its being obligated to collect and pay sales tax in the buyer’s state.

    3. Income tax (U.S.): A services provider working in State A for a customer in State B wouldn’t want to be liable for state income tax in State B. (Recall that professional athletes in the U.S. often must file state income tax returns in every state in which they play “away” games.)

    4. Right to sue (U.S.): In #3 above, suppose the services provider wasn’t qualified to do business in State B. Now suppose that the services provider wanted to sue the customer in State B, for example for non-payment. State B might well have a law prohibiting foreign corporations that “do business in” State B from bringing suit unless they are qualified to do business in that state. (I’m ignoring here the possibility of suing in federal court under diversity jurisdiction.)

  4. It can be relevant in
    certain consumer contracts in Canada. Here property and civil rights (and
    accordingly most contracts) are under the sole responsibility of the province. British
    Columbia has very specific disclosure requirements which may not be applicable
    if the whole of the contract is made outside of British Columbia. I believe you
    can’t actually agree to just set the location the dispute will be heard outside
    of British Columbia

  5. Specifying the place made also has the effect of designating a place where the contract may be litigated, without excluding any otherwise permissible places.


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