Choice of Law Contract Provisions

Many contracts specify a choice of law in the event of a dispute. Typically, this provision will require the law of the state of the party drafting the contract to be applied. In most circumstances, particularly where both sides have bargaining power in negotiating the terms of the contract, these provisions are valid. Choice of law provisions serve an important business purpose because they provide a level of assurance to interstate parties about how contract provisions will likely be interpreted and enforced. In truth, contract law does not vary much from state to state. But on those issues where states’ laws are at variance, it is a good idea to have specified which state’s law will apply to a dispute.