John lives in Texas. Paul lives in California. Paul flies to Austin where he meets with John, and they sign a contract to manufacture and sell wigs in the hairstyles of famous business law professors.

After John spends $350,000 to get the business started, Paul says he's changed his mind and backs out of the contract. John files suit for breach of contract in state court in Austin. Paul says he can't be sued in a Texas court because he doesn't live in Texas.

What would the Texas court say?

1.Paul lives in the United States, so he can be sued anywhere in the U.S., including Texas, under the long-arm statutes.

2.Paul signed the contract in Texas, so he can be sued in the Texas court in Austin under the Texas long-arm statute.

3.Paul is a resident of California, so unless he comes to Texas on his own,California isthe only place he can be sued.

4.Lawsuits between residents of different states can only be heard in a Federal court when the amount in controversy exceeds $75,000.