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New York Court Makes Ruling about Choice of Law Provision in Contract

Posted on Jan 01, 2016

At the end of 2012, the Court of Appeals of the State of New York issued a significant holding relating to choice of law provisions in contracts. The key point from the ruling is that if a contract contains a broad choice of law provision, no conflict of law analysis is necessary. New York law will apply regardless of whether another jurisdiction’s law also could apply.

In the case, a company sued another company for breach of a contract. The contract contained a choice of law provision that stated New York law should govern the agreement. The defendant in the case argued that the choice of law provision did not automatically mean that New York law would govern the relationship. Instead, it merely meant that New York law would govern the facts of the case in determining whether New York law would supersede the laws of any other jurisdiction.

If a choice of law analysis is done during a breach of contract matter, New York courts assess which jurisdiction has the strongest relationship to the transaction and the parties. That decision ultimately will determine which state’s laws will be applied to the matter in question. The court in this case noted the importance of eliminating uncertainty regarding the law when making its decision.

In addition to hopefully providing parties to a contract with more certainty, the new law also makes it clear that even if a contract does not explicitly state that a jurisdiction’s laws are designated as controlling, venue may still be proper.

To learn more about bringing a breach of contract or other business litigation matter, contact a New York breach of contract attorney today at (888) 497-3410.

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