Contractual choice-of-law provisions are one of the most frequently used yet repeatedly misunderstood provisions in modern contracts. In-house counsel and other practitioners frequently assume—often incorrectly—that a “standard” choice-of-law provision will cover all claims and issues. However, several recent decisions make clear that this is not the case. In-house counsel should take heed of the lessons derived from those opinions so as not to be caught off guard by choice-of-law provisions that fall short of expectations.
Consider the following scenario: a company enters into a contract and chooses to have New York law applied to any disputes that may arise. Its in-house counsel thus drafts the following seemingly broad choice-of-law clause:
“This Agreement shall be deemed to be executed and to be performed in the State of New York, and shall be construed in accordance with the laws of the State of New York as to all matters, including but not limited to matters of validity, construction, effect, and performance.”
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