A choice of law provision is a provision in a contract directing the parties to what state’s law will apply to the provisions of the contract. Jurisdiction clauses dictate which state and usually which county within that state a lawsuit can be brought. As an Atlanta contract disputes attorney, I am often asked whether these provisions are enforceable. Choice of law provisions are typically enforceable. Jurisdiction clauses in contracts almost always are enforceable.
Choice of law provisions usually are enforceable except in certain situations. For instance if the UCC (Uniform Commercial Code) applies to the contract because, for instance, the contract is a secured transaction (think bank loan), there may be a conflict with those laws and your choice of law provision. In addition, if the subject of the contract is such that your state wants to regulate it, a choice of law provision will not be enforceable because it will be against the public policy of your state’s laws. Another example of an unenforceable jurisdiction provision is found in most corporate governance contracts. These contracts typically must be litigated in the state where the corporation is incorporated.
Often choice of law provisions are not the most hotly negotiated aspect of a contract but certainly are very important. Contract law can be significantly different from state-to-state and choosing the governing law that best protects your rights is very important. I often find that jurisdiction clauses are more important in negotiations. This is because each party understandably wants to keep any litigation over the contract in their back yard where their attorneys and employees are to save of time and costs in litigation.
In light of the nuisances associated with including choice of law and jurisdiction clauses in contracts, it is always advisable to employ experienced business attorneys to draft and review your contracts. If you would like to learn more about various contract provisions to keep in mind when negotiating an important contract,visit our site for more useful legal information on Georgia contract law or call one of our experienced contract lawyers today.