Choice of Law Clause

A provision in a contract that chooses a particular law or legal system to govern contractual disputes. Where contracts are between two parties from the same jurisdiction and are to be performed in that jurisdiction, e.g., two English parties contracting for goods or services to be delivered in England, the question of which law applies to a contract is simple, it’s almost certainly England; alternately if the contract was between parties in say Wisconsin to be performed in Wisconsin, the choice of law would almost always be Wisconsin. However, in contracts where the parties are from different jurisdictions or services or goods are to be performed elsewhere (or in multiple places), the applicable law can be hard to predict, especially as jurisdictions can have different conflict of law rules. The usual solution to this is a choice-of-law clause that specifies a particular legal system (or laws), usually excluding its conflict of law rules.

One important aspect of choice of law clauses is that they usually cannot override public policy – so they cannot be used for example to defeat employment rights in a given jurisdiction or circumvent otherwise applicable laws and regulations such as antitrust, competition, consumer protection or criminal laws.

Related Terms