Contract Governing Law Clause Issue Spotting Rule

A Contract Governing Law Clause Issue Spotting Rule is a contract issue-spotting rule that assists in identifying contract-related issues concerning the application of governing law clauses (within a contract).

• AKA: Choice of Law Contract Issue-Spotting Rule
• Context:
  • It can highlight the presence of a Choice of Law Clause within the contract to ensure it is clearly stated and appropriately drafted.
  • It can (often) help determine if the specified law aligns with the contracting parties' intentions and the contract’s context, verifying that the chosen jurisdiction is relevant to the parties or subject matter.
  • It can prompt reviewers to check for any exclusions or limitations within the clause, such as the exclusion of conflict of law principles or certain international conventions that could impact enforceability.
  • It can signal the need for further analysis if the governing law originates from a jurisdiction unfamiliar to one or both parties, highlighting potential compliance or interpretative issues.
  • It can be incorporated into a Contract Review Playbook to standardize the approach to reviewing governing law details, ensuring consistent analysis across contracts.
  • It can serve as a reminder to confirm alignment between the Choice of Law Clause and related clauses, such as venue selection or dispute resolution clauses, which may rely on consistent jurisdictional assumptions.
  • ...
• Example(s):
  • One prompting a contract reviewer to verify conflict of law exclusion (ensuring alignment with jurisdictional-related clauses), such as:
    "All agreements shall be governed by the laws of the State of California, without giving effect to any conflict of law provisions."
  • One prompting review of federal law preemption addressing (for regulated industries), such as:
    "This Agreement shall be governed by federal law and, to the extent not preempted, the laws of the State of Delaware."
  • One prompting verification of international convention exclusions (for cross-border transactions), such as:
    "This Agreement shall be governed by German law, expressly excluding the United Nations Convention on Contracts for the International Sale of Goods."
  • One prompting regulatory compliance verification (for industry-specific contracts), such as:
    "This Agreement shall be governed by New York law, including all applicable securities laws and regulations."
  • One prompting verification of scope of law application definition, such as:
    "This Agreement and all matters of construction, validity, performance, and enforcement shall be governed by Texas law."
  • One prompting review of unusual jurisdiction selection lacking clear connection to parties, such as:
    "This Agreement shall be governed by the laws of Singapore, regardless of the parties' principal places of business."
  • One prompting verification of interpretation and enforcement coverage, such as:
    "This Agreement and all matters relating to its interpretation and enforcement shall be governed by New York law."
  • One prompting verification of industry regulations compatibility, such as:
    "This Agreement shall be governed by UK law, subject to all applicable financial services regulations."
  • ...
• Counter-Example(s):
  • Trust Deed Governing Law Clause Issue-Spotting Rules, which focus on governing law provisions in trust instruments rather than contracts
  • Corporate Bylaws Governing Law Provision Issue-Spotting Rules, which address governing law specifications in corporate governance documents
  • Statutory Construction Rules, which guide interpretation of governing law provisions within legislation rather than contractual arrangements
  • Regulatory Compliance Issue-Spotting Rules, which focus on governing law requirements from a regulatory perspective rather than contractual agreements
  • Contract Drafting Guidelines, which provide rules for creating new clauses rather than identifying issues in existing ones.
  • Boilerplate Clause Issue-Spotting Rules, which may focus on standard clauses like Entire Agreement Clauses without addressing governing law specifics.
  • Arbitration Clause Issue-Spotting Rules, which pertain to dispute resolution methods rather than directly addressing governing law.
• See: Choice of Law Clause, Contract Review Playbook, Venue Selection Clause, Dispute Resolution Clause.

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