I had a question on a choice of law provision recently, and just wanted to make a quick post on this...

In your "choice of law" or "governing law" contract provision, that's where you want to choose your choice of law AND the venue / forum.

Here's an example...

1.1.              Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Virginia and the federal laws of the United States of America.  Supplier hereby consents and submits to the jurisdiction and forum of the state and federal courts in the Commonwealth of Virginia in all questions and controversies arising out of this Agreement.

As you probably already know, individuals have the freedom to contract (assuming age, competency, legal purposes), but that contracts are generally governed by state law.

You can specify in your contract whatever law you want to govern the contract.  You can also choose the "place" (forum / venue).  In the example provision above, Virginia is the governing law and the forum.  I could have chosen a different forum, such as Florida, for example.  If I did, and we ended up in a contract dispute, the Florida courts would actually apply Virginia law.

If the selected governing law is different than the state of domicile for the parties, a court would really like to see some sort of nexus the selected governing law to the transaction.  But, generally speaking, a court will apply whatever governing law was selected provided that the governing law doesn't conflict with the public policy of the forum state.

So, from a negotiations point of view, you really want your state's law to govern and you really want the forum in your backyard.  If not, you're not on your home turf, and you're going to have to travel and generally spend a whole lot more money pursuing a dispute out of state.

Usually, when two parties are at loggerheads on negotiating a governing law provision and can't agree on which domicile to use for the governing law, the next best alternatives (in order) are NY, IL, and DE.  Why?  Because NY and IL have some of the oldest and best established trade law.  DE is next because its laws are corporation-friendly and tend to be relatively well-balanced.

But don't take governing law provisions for granted!  Governing law needs to be looked at very carefully by commodity and, if necessary, adjusted.  The example provision above is great for professional services but horrible for software.  Why?  Because VA has that crazy UCITA law, which works against me.  In that case, my governing law provision looks like the following:

17.2        Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Virginia and the federal laws of the United States of America.  Licensor hereby consents and submits to the jurisdiction and forum of the state and federal courts in the State of Virginia in all questions and controversies arising out of this Agreement.  Notwithstanding the foregoing, the parties agree that the Uniform Computer Information Transactions Act as enacted in Virginia, Va. Code §§ 59.1-501.1 et seq. (“UCITA”) or in any other Commonwealth or State of the United States shall not apply to this Agreement or any performance hereunder and the parties expressly opt-out of the applicability of UCITA to this Agreement.