Paralegal Certification PrepContracts and Business LawMedium
A freelance graphic designer, based in New York, agrees to create a logo for a client located in California. The contract includes a clause stating, 'Any disputes arising under this agreement shall be governed by the laws of the State of Delaware.' The logo is delivered, but the client refuses to pay, claiming the design is unsatisfactory. The designer wants to sue. Which of the following is true regarding the choice of law provision?
- AThe clause is generally enforceable as parties can choose the governing law for their contract.
- BNew York law will automatically apply due to the designer's location.
- CCalifornia law will automatically apply due to the client's location.
- DThe clause is unenforceable because neither party is located in Delaware.
Show answer & explanationAnswer & explanation
Correct answer: A. The clause is generally enforceable as parties can choose the governing law for their contract.
Choice of law provisions are generally enforceable, allowing parties to select the law of a particular state to govern their contractual relationship, even if neither party is located there, as long as there is a reasonable basis for the choice (e.g., Delaware's well-developed corporate law) and it doesn't violate public policy.
Why the other options are wrong
- B. Similarly, New York law would not automatically apply if a valid choice of law clause designates another state.
- C. While California might have a connection, a valid choice of law clause overrides default rules based on party location.
- D. The absence of a party's location in the chosen state does not automatically render the clause unenforceable if there's a reasonable relationship or basis for the choice.
Choice of Law Provision
A contractual clause that specifies which jurisdiction's laws will be used to interpret and govern the contract, typically in cases involving parties from different jurisdictions.
- Allows parties to select applicable law.
- Generally enforceable unless against public policy or no reasonable relationship.
- Important for predictability and consistency in multi-jurisdictional contracts.
Memory trick: For disputes, remember 'J.A.C.K.' (Jurisdiction, Arbitration, Choice of Law, K-terms).