LL&D Law
Choice of Law Provisions Can Be Important In Your Business Contracts

by R. Scott Thompson
1/30/2012 9:28:00 AM

 

     Choice of forum and law clauses can be vitally important, especially when the parties to the contract are located in different states (or countries) at the time the contract comes into being. Being forced to defend or prosecute a breach of contract dispute in a foreign jurisdiction can be expensive, inconvenient and lead to unpredictable results if the forum law is substantially different than the law under which the business normally operates.

 

     These terms can be complicated and it is recommended that you have an attorney help draft them properly. In general, however, there are three elements to consider: Jurisdiction, Venue and Choice of Law.

     Courts in Oklahoma do not have personal jurisdiction over everyone, everywhere. They have jurisdiction over any person or entity located within the State of Oklahoma, but they also have long-arm jurisdiction over those located outside Oklahoma under certain circumstances. Thus, it is important that your contract set forth a basis for subjecting the other party to the jurisdiction of the Oklahoma courts.

     Once your contract sets forth a basis for jurisdiction over disputes by an Oklahoma court, the next issue is to determine whether a specific venue is appropriate. Here, the emphasis is on the convenience of the drafting party. If you are located in Edmond, you presumably do not want to litigate issues relating to the contract in Altus.

     Finally, Choice of law is one of the most important provisions in a business contract. The law from state to state may not be uniform. What was legal in Oklahoma when you entered into the contract may make a contract voidable under the law of another state. While there is no legal requirement that the choice of forum and choice of law match, it is usually the case. There may, however, be circumstances where the law in another state is better and, while you want to litigate locally, you want the benefit of another state’s law. Be sure, however, to choose a state with some relationship to the matter.

 



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