California Choice of Law, Jurisdiction & Venue Clauses

The boilerplate section of many corporate agreements include a “governing law” provision. Often these provisions cover three related, but distinct choices – choice of law, choice of jurisdiction, and choice of venue. More importantly, the legal principles that govern these choices are not the same (at least here in California). In today’s posting, I discuss a California choice of law statute that may be unfamiliar to many California lawyers. In upcoming posts, I’ll discuss some surprising aspects of choice of jurisdiction and choice of venue clauses.

Section 1646 of the California Civil Code establishes a general choice of law rule for contracts: “A contract is to be interpreted according to the law and usage of the place where it is to be performed; or, if it does not indicate a place of performance, according to the law and usage of the place where it is made.” In 2006, the legislature added § 1301 to the California Commercial Code to add to and make specific the concept expressed in Civil Code § 1646. [I have for several years taught a class in commercial law (Articles 2, 2A and 7) at Chapman University School of Law.]

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