Choice of law clause
A choice of law clause[1] or proper law clause[2] is a term of a contract in which the parties specify that any dispute arising under the contract shall be determined in accordance with the law of a particular jurisdiction.[3]
| Conflict of laws and private international law |
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| Preliminaries |
| Definitional elements |
| Connecting factors |
| Substantive legal areas |
| Enforcement |
Explanation
As business transactions and contractual obligations may cross jurisdictional borders within a nation, as well as international borders, both physically and electronically, choice of law issues may arise in the event that it is necessary to interpret the terms of a contract or in the event of litigation over a contract dispute. As laws vary between jurisdictions, it is possible that contract terms could be interpreted differently between jurisdictions, or that portions of a contract that are enforceable in one jurisdiction would not be enforceable under the laws of another. The parties may therefore agree in advance to interpret the contract in accord with the laws of a jurisdiction that is identified within their contract.[4]
In some situations a court may find that there are public policy reasons to disregard a choice of law clause, and instead interpret a contract under the laws of the jurisdiction in which a lawsuit is filed. For example, a jurisdiction may find as a matter of public policy, it will apply its own consumer protection laws to a dispute between a consumer and a business even if the contract calls for the application of the laws of a different jurisdiction.[4][5]
References
- Larson, Aaron (22 July 2016). "Common Contract Clauses". ExpertLaw.com. Retrieved 11 October 2017.
- Sinclair, Anthony C. (December 2004). "The Origins of the Umbrella Clause in the International Law of Investment Protection". Arbitration International. 20 (4): 411–434. doi:10.1093/arbitration/20.4.411.
- "choice of law clause", Webster's New World Law Dictionary, Hoboken, New Jersey: Wiley Publishing, Inc., 2006
- Woodward, William J. Jr. (2004). "Legal Uncertainty and Aberrant Contracts: The Choice of Law Clause". Chicago-Kent Law Journal. 89: 197. Retrieved 11 October 2017.
- Homle, Julia (2017). "Global social media vs local values: Private international law should protect local consumer rights by using the public policy exception?". Computer Law & Security Review. 33 (6): 391–397. doi:10.1016/j.clsr.2017.08.008.
Further reading
- Lea Brilmayer and Jack Goldsmith, Conflicts of Law: Cases and Materials, Fifth Edition (2002), p. 280-303.