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How meaningful is the “choice of law” provision in an M&A contract? While it may seem like an unimportant or technical issue that matters mostly to the lawyers, some significant differences in the applicable legal standards on key issues could lead to drastically different business results. Thus, deal participants will want to consider the potential impact and relative importance of these issues before proposing or agreeing to the choice of law.

In the vast majority of M&A transactions involving sophisticated parties, the transaction agreements are typically governed by the laws of either Delaware or New York. This is due to the fact that both jurisdictions have long-standing reputations for presiding over cases involving highly complex and sophisticated commercial issues, and are well-regarded for their judges and court systems. Additionally, these jurisdictions are attractive to parties because Delaware is home to many target companies involved in M&A transactions, and New York’s courts are well-known for giving utmost deference to contract terms. However, as discussed below, Delaware and New York apply different legal standards with respect to several important issues in the M&A context that deserve attention in deciding which law to choose.

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