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oflaw clause is a contractual provision that selects a law to govern the contract. These clauses facilitate settlement by identifying the law that will be applied to resolve future disputes, thereby allowing the parties to more accurately assess the strength of potential claims.
Under the most significant relationship test, courts look to the following factors to determine which state's law applies: Location of contract formation. Where the relationship of the parties is/was centered. Location of contract negotiations. Location of performance of either or both parties.
Sample Language: All communications, data, documentation, and disclosures of information by the Parties under this Agreement will be in English and the English language will be the governing language in the performance of this Agreement.
So how do you choose which Governing Law is best for your contract? Although there are legal options potentially allowing you to choose at random, it is generally advisable to pick a jurisdiction you are connected to ? where your business is located, or perhaps where production is handled.
The governing law provision is commonly used by parties residing in different jurisdictions to ensure that one party does not have an advantage over each other party.