Choice of Law Clause in Contract

A choice of law or governing law clause in a contract allows the parties to choose the laws of a particular state or country to be used to interpret the agreement. The parties might live in, or sign the agreement, in a different state or country.

Choice of Jurisdiction

Choice of jurisdiction may be specified differently from the choice of law location. Jurisdiction chooses where a dispute will be resolved. A contract could require lawsuits to be filed in one state but decided under the law of another state.

The selection of the state for jurisdiction is often more important because that’s where the parties will have to go to resolve the dispute. It might give the local party a home field advantage and require the other party to travel a great distance, to a faraway unfamiliar state or foreign country. There may be different political climates or track records in different courts.

Not all types of actions allow for the choice of jurisdiction or venue. In many real estate transactions, the default venue is the location of the real estate.

Choice of Law Clause

A choice of law clause is often combined with the choice of jurisdiction. For example: Governing Law. The parties agree that this Agreement shall be governed by the laws of the State of Colorado, without regard to its conflict of laws provisions, and that all disputes shall be resolved under the personal and exclusive jurisdiction and venue of state or federal courts in Colorado.

Some clauses will include a specific county, court district or court.

Choice of Law Locations for Internet Vendors

People and transactions frequently cross state, national and international borders, both physically and electronically, The laws may vary slightly or greatly between jurisdictions. A vendor is likely to choose the jurisdiction that provides the best advantage or protection. Many large corporations choose Delaware law because there is a long history of court cases and outcomes of similar disputes are more predictable.

When doing business on the internet, the website Terms of Use or an End User License Agreement (EULA) for software will usually define the choice of law location. Casual users and customers may not bother to read the terms and have no idea which laws will govern any dispute resolution.

Digital goods and services may be delivered anywhere in the world by internet connection, so the parties might be on the opposite sides of the country or the world. Consumer protection laws vary by state. A consumer might be giving up stronger consumer protection for weaker consumer protection. Other variations include statutes of limitation, stronger creditor or debtor protection, and stricter requirements for certain laws.

Here are some examples of choice of law locations from popular vendor websites.

Consumers and business owners should pay attention to details of contracts, website terms of use and license agreements.

Visit our website for Colorado Springs Mobile Notary services or Colorado Notary Training classes.

© Copyright 2017  ABC Legal Docs, LLC  All rights reserved.  Do not copy.  Citations welcome.  Terms of Use apply.