Governing Law

What Is Governing Law? A governing law clause, also called a choice of law provision, designates which state or country's legal framework will apply to the interpretation, enforcement, and validity of a contract. This provision is essential in agreements between parties located in different jurisdictions, as contract law varies significantly from state to state and country to country. ## Why Governing Law Matters - Different jurisdictions have different rules for contract interpretation - Statutes of limitations vary by state - Enforceability of certain provisions (such as non-competes) depends on local law - Consumer protection and employment regulations differ across jurisdictions ## Key Considerations Governing law clauses are generally enforceable when the chosen jurisdiction has a reasonable relationship to the contract or the parties. Courts may refuse to honor the provision if the chosen law violates a fundamental public policy of the forum state. A governing law clause is often paired with a forum selection clause, which specifies where disputes will be litigated. Together, these provisions provide predictability and reduce the risk of jurisdictional disputes.