Choice of Law
A clause specifying which state's law will govern the interpretation of a contract. In prenups, often used by couples likely to move — but not always honored by future courts.
A typical prenup includes a clause like "this agreement shall be governed by the laws of the State of California." Useful in theory; not bulletproof in practice. When the parties later divorce in a different state, that state's courts decide which state's law applies. They can refuse to apply the chosen state's law if doing so would violate the new state's public policy.
The canonical case is DeLorean v. DeLorean (NJ 1986), where a California choice-of-law clause was rejected by a New Jersey court applying New Jersey law instead. For high-mobility couples, choice-of-law clauses help but don't replace drafting that satisfies the laws of likely future residence states.
Related terms
- DeLorean v. DeLorean — The 1986 New Jersey case where a California choice-of-law clause was rejected by a New Jersey court applying New Jersey law instead — the canonical "choice of law isn't a guarantee" case.
- Public Policy — A judicial doctrine that allows courts to refuse to enforce contracts that violate fundamental societal interests, even when the contract is otherwise valid.
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