LinkedIn Series Chapter 5: Choice of Law and Venue

December 25, 2013
Jack Walsh

The United States is a patchwork of laws. Every state's laws differ at least a little bit. Tribal lands within states have their own laws which may or may not differ significantly from state law. Commerce with companies outside the U.S. is increasingly common and foreign law can be very different from U.S. law. If a contract is well drafted, it will do its job under that parties’ home state law; it may not under the law of another state or country. Companies which do business across state lines or overseas try to make sure that the law of their home state and country apply by inserting a choice of law clause. Choice of venue clauses take this concept to the next level and attempt to force any disputes into the courts in the parties’ home state. Litigation at home is always cheaper. Home field advantage can work in conjunction with choice of governing law clauses to increase the chance that all disputes are decided under the law the party knows and understands.

Winning the acceptance fight and controlling the venue and choice of law can be important or trivial depending on the legal issue. For example, the Statue of Frauds controls what contracts must be in writing. They differ very little from state to state, however non-competition clauses vary widely. In California, they are rarely enforceable, while in other states, particularly in the Midwest, they are routinely enforced.