Determining which court is appropriate for your contract action requires an understanding of jurisdiction. A court can only hear a case if it has jurisdiction over the person sued and the subject matter of the case. Even then, the defendant may be able to get the case transferred if another court is more convenient to the witnesses.
Personal Jurisdiction
A court must have jurisdiction over the person you are suing in order to hear the case. This generally means that the person you are suing must reside in the state. If the defendant is a business entity, like a corporation, the entity must do business in the state to give the state's courts jurisdiction.
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Subject Matter Jurisdiction
To select the right court for your case, it is necessary to familiarize yourself with the courts in your state and with the matters each can handle. Courts of general jurisdiction, like California's Superior Courts, are authorized to handle a wide range of cases, including breach of contract. Other courts have more limited jurisdiction. For example, small claims court cases in California are generally limited to those involving claims of $10,000 or less.
Venue
Once you determine which state and court has jurisdiction over your breach of contract case, you must look at venue. The venue laws attempt to ensure that court cases are heard in the county or district most convenient for the witnesses to the matter. Generally, for a breach of contract case, the following counties will have appropriate venue: the county where the defendant lives; where he does business; where the contract was entered into; or where it was breached.