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Governing law clauses, also known as choice of law clauses, are used in contracts and agreements and declare the laws that govern the transaction in case a dispute arises. They are standard clauses found in business contracts and transactions.
Here’s a web page that explains governing law clauses.
Governing law clauses ensures that there’s no confusion regarding the applicability of laws to a contract. The party offering the agreement stands to benefit the most since they can require the contract to recognize their local laws.
The purpose of governing law clauses gives a contract certainty regarding the laws applied when a legal issue occurs. If one party lives in another state or country, then the governing law clauses ensure that the parties agree upon which codes apply to the agreement.
Examples of governing law clauses include:
Governing Law and Venue. The laws of the State of North Carolina shall govern the validity, construction, enforcement, and interpretation of this Contract, unless otherwise specified herein except for the conflict of laws provisions thereof. Subject to Section 13.24, all claims, disputes and other matters in question arising out of or relating to this Contract, or the breach thereof, shall be decided by proceedings instituted and litigated in a court of competent jurisdiction in the state in which the Property is situated, and the parties hereto expressly consent to the venue and jurisdiction of such court.
Reference:
Security Exchange Commission - Edgar Database, EX-10.42 2 aipl2landmark_ex10z42.htm EXHIBIT 10.42, Viewed May 10, 2021, < https://www.sec.gov/Archives/edgar/data/711642/000071164209000488/aipl2landmark_ex10z42.htm >.
Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas without regard to applicable principles of conflicts of law. Each of the parties hereto irrevocably consents to the exclusive jurisdiction of any federal or state court located within Austin, Texas, in connection with any matter based upon or arising out of this Agreement or the matters contemplated herein, agrees that process may be served upon them in any manner authorized by the laws of the State of Texas for such persons and waives and covenants not to assert or plead any objection which they might otherwise have to such jurisdiction and such process.
Reference:
Security Exchange Commission - Edgar Database, EX-2.1 2 dex21.htm ASSET PURCHASE AGREEMENT, Viewed May 10, 2021, < https://www.sec.gov/Archives/edgar/data/1428669/000119312510013625/dex21.htm >.
Governing Law. This Agreement and all disputes arising out of or in connection with this Agreement shall be governed by, interpreted under, and construed and enforceable in accordance with, the laws of the State of New York, U.S.A., without giving effect to conflict of law principles.
Reference:
Security Exchange Commission - Edgar Database, EX-4.12 3 dex412.htm SHARE PURCHASE AGREEMENT, Viewed May 10, 2021, < https://www.sec.gov/Archives/edgar/data/1329394/000119312507148404/dex412.htm >.
Governing Law. This Agreement and the Ancillary Agreements shall be construed in accordance with and governed by the Law of the State of Delaware, without regard to the conflicts of law rules of such state.
Reference:
Security Exchange Commission - Edgar Database, EX-2.1 2 dex21.htm ASSET PURCHASE AGREEMENT, Viewed May 10, 2021, < https://www.sec.gov/Archives/edgar/data/1080866/000119312508111207/dex21.htm >.
Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of Delaware without reference to its principles of conflicts of laws.
Reference:
Security Exchange Commission - Edgar Database, EX-10.1 2 dex101.htm ASSET PURCHASE AGREEMENT, Viewed May 10, 2021, < https://www.sec.gov/Archives/edgar/data/92769/000119312510145775/dex101.htm >.
Common contracts with governing law clauses include:
Any contract is a good candidate for incorporating governing law clauses.
Governing law clauses are vital to get right. Learn more by checking out the governing law clause FAQs below:
If there is no governing law clause, then the court overseeing your case will decide. Fighting the case in the wrong jurisdiction can result in a breach of contract case in civil court with litigation lawyers.
You determine the governing law of the contract through the civil court system or alternative dispute resolution, such as arbitration, a binding solution, or mediation, a non-binding solution. Early neutral evaluation and negotiation can help avoid potential disputes in the future.
The laws that govern your contracts should depend upon your business goals. Contract lawyers can help you decide on and negotiate the correct contract law for your situation.
Here’s an article about choosing your governing law clause.
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Meet some lawyers on our platformI received my undergraduate degree from Columbia University and my JD from UC Davis School of Law. I specialize in drafting, reviewing, and litigating contracts, general civil litigation, restraining orders, and family law. I have helped entrepreneurs form their business entities and grow their small businesses. This area of my practice has focused heavily on YouTubers, podcasters, and individuals creating unique online platforms. In the family law context, I have helped my clients petition for and obtain custody of their children and modify existing custody arrangements.
Kelynn was born and raised in Cleveland, Ohio. She attended Spelman College in Atlanta, Georgia where she earned a Bachelor of Arts in Philosophy, and thereafter returned to Cleveland for law school . She earned her Juris Doctor at Cleveland State University - Cleveland Marshall College of Law. She primarily practices insurance defense and civil litigation. She has also practiced in a variety of other areas including family law, contract disputes, contract review, complex civil litigation, medical malpractice, products liability, and mass tort.
