Also known as:governing law clause · governing-law clause · governing-law clauses · choice of law clause · choice-of-law clause · applicable law clause
Written by attorneys · grounded in primary & secondary sources — see below
A contractual provision that designates the substantive law of a particular jurisdiction to govern disputes arising under the agreement.
Sources & Authorities
How it applies
Common Examples
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Long-Term Contract Supports Jurisdiction
Global Dynamics, a Florida corporation, negotiated a multiyear berthing and maintenance agreement with Pine Cove Charters, a Maine partnership. The contract required Pine Cove's fleet to winter annually at the Florida marina and selected Florida law to govern disputes. When Global Dynamics sued for unpaid fees in Florida court, Pine Cove moved to dismiss for lack of personal jurisdiction. The court denied the motion because the ongoing Florida-centered relationship and governing law clause established purposeful availment.
Seven-Year Management Deal
West Events, headquartered in State A, signed a seven-year contract with singer Jade domiciled in State B. The agreement required all branding approvals, accounting, and legal oversight at West Events' State A offices and selected State A law. Jade never visited State A. When West Events sued in State A for breach, Jade moved to dismiss. The court found specific jurisdiction proper because the long-term interdependent relationship with contemplated consequences in State A and the governing law clause satisfied minimum contacts.
Select any source to read its text and confirm it supports the definition.
Cases
Casebooks
Allstate Insurance Co. v. Hague449 U.S. 302, 308 n.11, 101 S.Ct. 633, 638 n.11, 66 L.Ed.2d 521 (1981)
Multiyear Drug Development Pact
West Life Sciences, based in State A, entered a multi-year services agreement with Zenith Drug in State B. The contract required joint patent filings through State A offices, ongoing data sharing, milestone payments, and a State A choice-of-law clause. Zenith performed all lab work in State B. After a payment dispute, West Life Sciences sued in State A. The court upheld jurisdiction because the interdependent relationship and governing law clause created foreseeable future consequences in the forum.
Vimar Seguros y Reaseguros, S.A. v. M/V Sky Reefer515 U.S. 528 (1995)
Franchise Supply Obligations
White Kitchen in State A granted a ten-year franchise to Republic Restaurant in State B. The agreement required Republic to purchase all supplies from White Kitchen in State A, attend training sessions there, and follow State A law. Republic bought over $500,000 in supplies and sent managers for training. When Republic switched suppliers, White Kitchen sued in State A. The court denied the motion to dismiss because the long-term purchasing and training obligations plus the governing law clause established purposeful contacts.
Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc.473 U.S. 614 (1985)
Common questions
Frequently Asked
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Does a governing law clause alone establish personal jurisdiction over a nonresident defendant?+
No. A governing law clause is an important factor showing the parties' expectations but must combine with other contacts such as a long-term interdependent contractual relationship and contemplated future consequences in the forum. Courts examine the entire course of dealing rather than any single provision.
Supporting sources
How does a governing law clause interact with the fairness prong of specific jurisdiction?+
The clause signals that the defendant foresaw litigation in the chosen forum and therefore reduces the likelihood that the forum will be gravely inconvenient. Absent a showing of severe disadvantage, jurisdiction remains fair when the clause accompanies substantial forum-directed performance obligations.
Supporting sources
Can remote performance satisfy the purposeful availment test when a governing law clause is present?+
Yes. Ongoing remote customization, virtual meetings, revenue sharing, and data uploads directed at the forum resident, together with a governing law clause selecting forum law, demonstrate that the defendant deliberately created continuing obligations centered in the forum even without physical presence.
Supporting sources
449 U.S. 302, 101 S. Ct. 633, 66 L. Ed. 2d 521 (1981)Conflict of Laws
…law was applied). At the same time, Allstate did not seek to control construction of the contract since the policy contained no choice-of-law clause dictating application of Wisconsin law. See Clay II, supra , at 182 (nationwide coverage of policy and lack of choice-of-law clause). [^maj-25]: Justice Black’s dissent in the first Clay…