A Primer on Service-of-Process Clauses

A service-of-process clause is a contract provision that specifies how a summons and a complaint shall be served upon a person named as a defendant in a U.S. court.

This post surveys the issues presented by such provisions. It first discusses the three most common varieties: (1) those that specify a method by which process is to be served, (2) those that appoint an agent to receive process, and (3) those that waive service of process altogether. It then discusses some of the interpretive issues posed by these clauses.

Specifying a Method

The typical service-of-process clause states that the parties consent to receive service of process via certified or registered mail. Here is an example:

The Company hereby irrevocably consents to the service of process of any of the aforementioned courts in any such suit, action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid to the address specified above.

Although this sort of clause doesn’t do any harm, it does little to expand the range of service options available to plaintiffs. Most states already permit defendants to be served via mail. The more interesting clauses are those in which the parties consent to service of process via a method not expressly authorized by a state statute or the Federal Rules of Civil Procedure (FRCP). Here is an example that authorizes service to be effected via email:

Each Merchant and each Guarantor also consent to service of process and legal notices made by e-mail to the E-mail Address set forth on the first page of this Agreement or any other e-mail address(es) provided in writing to WCG by any Merchant or any Guarantor, and unless applicable law or rules provide otherwise, any such service will be deemed complete upon dispatch.

The legality of such a provision was challenged (and upheld) in Wynwood Cap. Grp. LLC v. Confluence Corporation (2024). A New York state trial court held that, as a matter of New York state law, contracting parties were “free to mutually agree upon a method of service of process other than those provided for in statute” and that they could therefore elect to subject themselves to service of process by “the computer-era communication means of email.” A federal district court in Florida reached the same conclusion in Square Ring v. Troyanovsky (2018). The Russian defendant had consented to receive service in any “manner provided for the sending of notices in this Agreement.” The notice provision, in turn, allowed for notice by email. The defendant was served by email but argued that the service was ineffective because the plaintiff did not comply with FRCP 4. The court rejected this argument. It observed that “parties . . . may agree in advance to a method of service not otherwise permitted by Rule 4.” Service of process must also comply with due process but the Supreme Court has held that this requirement is satisfied if the defendant has consented to a particular method of service.

The typical service-of-process clause is also useful to plaintiffs in that it lists a mailing address for the defendant. In First National Bank of Boston v. Ibarra (1999), Raymond Ibarra contracted with a bank to guarantee a mortgage note. The note went into default and the bank sued Ibarra. A deputy sheriff served the summons and complaint at the address listed by Ibarra in the service-of-process clause in the guaranty agreement. Ibarra had, however, recently moved to a new address without notifying the bank. Ibarra sought to dismiss the suit on the grounds that he was never served with a copy of the summons or the complaint. This motion was denied. The Court of Appeals pointed out that the bank had served Ibarra at the address listed in the clause and faulted Ibarra for omitting to notify the bank of his change of address. “This omission,” the court held, “proves fatal to the defendant’s appeal.”

Appointing an Agent

Some service-of-process clauses go beyond merely specifying a method. These clauses require each of the parties to nominate an agent to receive service of process in a specific jurisdiction. Here is an example:

Each of the parties agrees to appoint and maintain an agent in the State of Delaware as such party’s agent for acceptance of legal process.

This type of clause greatly simplifies the process of serving a summons and a complaint upon a defendant. Consider the facts of National Equipment Rental, Ltd. v. Szukhent (1964). A New York equipment leasing company entered into a lease agreement for agricultural equipment with farmers in Michigan. That agreement provided that “the Lessee hereby designates Florence Weinberg [the wife of one of the executives at the leasing company], 47-21 Forty-First Street, Long Island City, N.Y., as agent for the purpose of accepting service of any process within the State of New York.”  The farmers failed to make required payments and the company sued them in federal court in New York. It delivered the summons and the complaint to Florence Weinberg, who then mailed the summons and complaint to the farmers. The U.S. Supreme Court upheld this arrangement as consistent with the Federal Rules of Civil Procedure. In so doing, it greatly facilitated the ability of leasing companies to effectuate service upon out-of-state defendants.

A clause designating an agent to receive service also allows plaintiffs to avoid the delays associated with serving defendants outside the United States by delivering a summons and a complaint to an agent located within the United States. Under the Hague Service Convention, U.S. plaintiffs are not always permitted to serve foreign defendants directly. Instead, they must sometimes deliver the summons and the complaint to the designated central authority in a foreign country. The central authorities in some countries—including China—are known to be slow to deliver these papers to defendants. If a foreign defendant appoints an agent to receive process in the United States, however, the Hague Service Convention does not apply because there is no “occasion to transmit a judicial or extrajudicial document for service abroad.” In such cases, the U.S. Supreme Court has held, one need only comply with the usual rules for serving domestic defendants. (The English courts have reached the same conclusion with respect to cases brought in England.) Since serving an agent of a foreign defendant in the United States is in most cases quicker and easier than serving a foreign defendant abroad, it is common to find clauses appointing local agents for service of process in international agreements.

Waiving Service

In still another variety of service-of-process clause, the defendant waives service of process altogether. Here is an example:

Consultant agrees to waive formal service of process under any applicable federal or state rules of procedure. Service of process shall be effective when given in the manner provided for notices hereunder.

While provisions waiving service outright are unusual—and generally inadvisable—they do exist. In Alfred E, Mann Living Tr. v. ETIRC Aviation S.a.r.l. (2010), a New York state trial court was presented with a clause stating that “GUARANTOR HEREBY . . . WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT.” The Dutch defendant argued that the email he received in lieu of formal service of process was insufficient as a matter of due process. The court disagreed. It observed that “parties to a contract are free to contractually waive service of process” and that “such waivers render inapplicable the statutes that normally direct and limit the acceptable means of serving process on a defendant.” It then went on to hold that the waiver at issue rendered the Hague Service Convention inapplicable because there was no need to transmit any documents abroad.

Outright waivers of service of process present obvious risks to the party defending the lawsuit.  They may also generate headaches for the plaintiffs. Among other things, any judgment obtained from a U.S. court on the basis of an outright waiver may prove difficult to enforce abroad, particularly if the defendant never received actual notice of the suit.

Clause Interpretation

U.S. courts are sometimes asked to determine whether a clause (1) designates a method by which process is to be served, or (2) waives service of process altogether. Their record in this area is undistinguished. In Rockefeller Technology Investments (Asia VII) v. Changzhou SinoType Technology Co. (2020), the California Supreme Court held that the following contract provision conveyed the intent of the parties to waive service of process altogether in a case involving a Chinese defendant:

The  Parties  shall  provide  notice  in  the  English language  to  each  other  at  the  addresses  set  forth  in  the Agreement  via  Federal  Express  or  similar  courier,  with  copies via facsimile or email, and shall be deemed received 3 business days after deposit with the courier. The  Parties  hereby  submit  to  the  jurisdiction  of  the Federal and State Courts in California and consent to service of process in accord with the notice provisions above.

It is difficult to understand why a contract provision in which the parties “consent to service of process” via a particular method should be interpreted an outright waiver. In Seagate Technology LLC v. Goel (2022) the California Court of Appeal rendered an equally baffling interpretive decision. It held that the following service-of-process clause constituted an outright waiver in a case involving an Indian defendant:

The parties agree to service of process by U.S. mail for any action in the Selected Courts to enforce the Settlement Documents at the addresses set forth for Notice in paragraph 38 above.

Again, it is difficult to understand why a clause specifying a method for serving process should be construed as a clause waiving service of process. Given the significant consequences for the defendant that flow from waiving service of process, the courts should be cautious about interpreting a clause to reach this result absent clear and unequivocal language.

Conclusion

The service-of-process clause gets far less attention than its contractual brethren—the choice-of-law clause, the forum selection clause, the arbitration clause, and waiver of jury trial clause. It can, however, prove vitally important in lawsuits where the defendant is outside of the United States or is otherwise difficult to serve. In particular, a service-of-process clause appointing an agent or waiving service may allow the parties to avoid the delays sometimes associated with serving defendants abroad under the Hague Service Convention.