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Law and disputes

Governing law and jurisdiction clause: meaning and sample wording

A governing law clause chooses which country's or state's law applies to the contract. A jurisdiction clause chooses which courts will hear disputes about it. They are separate choices, usually placed together.

When to use it

Every contract should have both, and they matter most when the parties are in different states or countries.

Sample governing law and jurisdiction clause

This Agreement and any dispute or claim (including non-contractual disputes or claims) arising out of or in connection with it or its subject matter or formation shall be governed by and construed in accordance with the laws of the State of New York, without regard to its conflict of laws principles.

The courts of the State of New York sitting in New York County, and the United States District Court for the Southern District of New York, shall have exclusive jurisdiction to settle any dispute or claim arising out of or in connection with this Agreement.

What to check

  • Law and courts are differentYou can choose New York law and London courts, but it is usually cheaper and faster to match the two.
  • Exclusive or non-exclusiveExclusive jurisdiction stops the other party suing elsewhere. Non-exclusive leaves room to sue where the other party's assets are.
  • Non-contractual claimsCovering claims such as misrepresentation and negligence stops a party avoiding the clause by suing in tort.
  • Mandatory local lawConsumers and employees are often protected by the law of where they live or work, whatever the contract says.

Make the variable parts fill themselves in

In a Word template, replace the details that change with {tags} and wrap optional wording in a section. Clausery turns them into questions, so each document only includes the parts that apply:

This Agreement is governed by the laws of {governing_law}.{#has_jurisdiction} The courts of {jurisdiction} have exclusive jurisdiction over any dispute arising out of it.{/has_jurisdiction}

Paste this into your own template, then check it with the free template tag checker or read the template syntax.

Questions

What is the difference between governing law and jurisdiction?

Governing law is the set of legal rules used to interpret the contract. Jurisdiction is which court decides the dispute. A court in one country can apply another country's law, but it is slower and more expensive.

What happens if a contract does not choose a governing law?

Courts apply conflict-of-laws rules to work it out, typically looking at where the parties are and where the contract is performed. The result can be uncertain and expensive to argue about.

Can I use this sample wording as it is?

It is a general starting point. Contract law differs between countries and states, and the right wording depends on the deal, so have it reviewed before you rely on it.

Free templates that use it

Related clauses

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This page is general information, not legal advice. Laws differ between countries and states; have wording reviewed for your situation before you rely on it.