DealLawyers.com Blog

Weil’s Glenn West recently posted a very unusual blog on one of his favorite topics – choice of law and choice of forum provisions.  The blog starts out conventionally enough, with an overview of the importance and complexity of these contract provisions:

The decision as to which law applies in resolving a dispute arising from or related to a contract can be outcome determinative—i.e., a claim may be sustainable if one state’s law applies, but unsustainable if another state’s law applies. Contractually-related disputes include both traditional breach of contract claims, as well as tort-based claims such as fraud and negligent misrepresentation. A properly-worded choice-of-law clause can, in most instances, ensure that the contractually chosen law will be the law applied to both kinds of disputes.

A similar but related decision that can be outcome determinative in a contractually-related dispute is the decision as to what is the proper forum for the dispute. Regardless of what law is required to be applied in that forum by an otherwise valid choice-of-law clause, procedural rules of a forum can override the application of certain aspects of the chosen substantive law. As a result, valid claims under the chosen substantive law can be rendered unsustainable based on procedural rules of the forum (some of which are not recognizable to most as procedural), unless the choice-of-law clause is sufficiently broad to address these procedural rules.

Despite the importance of these issues, and the number of times courts are forced to decide which law applies to a particular claim, or whether the forum court should even hear the claim, these provisions continue to receive short shrift by deal lawyers. There is what UNC Law Professor John Coyle, who is the foremost authority in this area, a “Secret Language of Choice-of-Law and Forum Selection Clauses.” Becoming fluent in this secret language is not difficult, and prior Weil Private Equity Blog posts have provided frequent opportunities to master this language. Nevertheless, it seems like new cases requiring the courts to apply this secret language to clauses that were drafted by lawyers who have refused to learn this language, or remain unaware of its existence, are ubiquitous.

This is where things begin to get unconventional – Glenn provides links to the resources he’s cited in the last paragraph, and then challenges readers to take a quiz on the topic. This quiz is not easy – at least for me – but the topic’s an important one & as they say, “knowledge maketh a bloody entrance.”

– John Jenkins