Choice of Law

Question 1

What are the constitutional limitations on choice of law?

Answer 1

Due Process Clause
- A forum sate may apply its own law to a particular case only if it has a significant contact or significant aggregation of contacts with the state such that a choice of its law is neither arbitrary nor fundamentally unfair.

Full Faith and Credit Clause

• Requires a forum state to apply the law of another state when the forum state has no contacts with or interest in the controversy, but it does not prevent the forum state from applying its own law when the forum has such contacts or interest.
• Exception: public policy: Does not require a state to apply another state’s law in violation of its own legitimate public policy.

Question 2

What is party-controlled choice of law?

Answer 2

Most courts will enforce a contractual choice of law provision if it is

(1) a valid agreement with an effective choice of law clause;
(2) applicable to the lawsuit under the terms of the contract;
(3) Reasonably related to the lawsuit; AND
(4) Not in violation of public policy of the forum state or another interested state.

Question 3

What are the three approaches to choice of law in general?

Answer 3

1. Vested-Rights Approach (First Restatement)
2. Most-Significant-Relationship (Second Restatement)
3. The Governmental-Interest Approach

Question 4

What is the vested-rights (traditional) approach?

Answer 4

Each state determines the legal effect of events that occur within its territory. As soon as a significant event occurs (Location where the last liable event took place), a legal right o becomes vested under the laws in the state where it occurred.

Question 5

What is the most-significant-relationship approach?

Answer 5

Apply the law of the state with the most significant relationship.

Three guiding principle clusters (7 total principles)

1. Promoting the policies of the forum and other interested states.
2. Systematic Interests
   - CUPS (certainty, uniformity, predictability, and simplicity).
3. Protecting the justified expectations of the parties
   - Applies to panned transactions.

If no state has a more significant relationship, courts will apply forum law as a tie breaker.

Question 6

What is the governmental-interest approach?

Answer 6

If the law of the state applies, it is said to be interested in the case.

• If only one state is interested, there is a false-conflict, and courts should apply the law of the one interested state.
• If more than one state is interested, there is a true conflict and courts should apply the law of the forum state.
• If neither is interested, apply law of the forum.

See if law is conduct regulating (declare some conduct wrongful) or loss-shifting (who can or can’t be blamed).

• States have an interest in applying a conduct regulating law when the wrongful conduct occurs within its territory or a state domiciliary is injured.
• States have an interest in applying loss-shifting law when doing so would benefit a state domiciliary.

Question 7

What is the conflict of law rule in federal diversity cases?

Answer 7

The federal district court is generally required to apply conflict-of-law rules in the state in which it sits.

If transferred, the first court’s choice of law rules will be applied.

Question 8

What are the specific areas of law that have special choice of law rules generally?

Answer 8

Torts

Contracts

Property

Inheritance

Family Law

Question 9

What is the special rule for torts and choice of law?

Answer 9

Vested-Rights
- Governed by the law of the place where the wrong was committed. Where the last event necessary to make the actor liable for the tort took place.

Most Significant Relationship
- Court considers four important contacts; (1) the place of injury; (2) the place where the conduct causing injury occurred; (3) the domicile, residence, place of incorporation, or place of business of the parties; and (4) the place where the relationship is centered.

Governmental Interest
- The forum state generally looks to its own law, so long as that state has a legitimate interest in applying its own law.

Question 10

What is the special rule for contracts and choice of law?

Answer 10

Express choice of law of parties
- It will govern, unless; (1) contrary to public policy; (2) there is no reasonable basis for the choice; or (3) there was fraud or mistake and true consent was not given.

Vested-Rights

• The law of the place where the contract is executed will apply for; (1) validity of contract, (2) defenses to formation, and; (3) interpretation of the contract.
• the law of location where the contract was to be performed will apply to; (1) details of performance; (2) the person who is obligated to perform and the person to whom performance is to be made; (3) sufficiency of performance; and (4) excuses for non-performance.

Most-Significant Relationship

• 3 cluster factors + three additional.
• 1. The location of the contracting, negotiation, and performance; 2. the place where the contract’s subject matter is located; and 3. the location of the parties domiciles, residencies, incorporation, or places of business.

Default Rules

• Will apply unless another state is found to have a more significant relationship with regard to the issue.
• Land contracts are controlled by the law of the situs (location) of the land.
• Personal property contracts are controlled by the law of the state where the place of delivery is located.

Question 11

What is the special rule for property and choice of law?

Answer 11

Tangible Personal Property

• UCC generally governs, parties can stipulate, and if not, forum state applies its version of UCC.
• For secured transactions, the law governing the perfection, non-perfection, and priority is generally the law of the state in which the debtor is located.

Transactions Not Covered by the UCC

• Vested Rights Approach: State in which the property was located at the time of transaction.
• Most Significant Relationship: The law of the situs of the tangible personal property at the time that the relevant transaction took pace.

Real Property

• Vested Rights: the law of the situs of the real property.
• Most Significant Relationship: the law of the situs of real property.

Question 12

What is the special rule for inheritance and choice of law?

Answer 12

Personal Property
- Law of the decedents’ domicile at the time of death.

Real Property
- Law of the situs.

Question 13

What is the special rule for family law and choice of law?

Answer 13

General Rule: Marriages are valid where they took place and are recognized in all other states.

Divorce
- Questions of law relating to grounds for divorce are controlled by law of plaintiff’s domicile.

Pre-Marital Agreements

• Most states apply the law of the state with the most significant relationship.
• Other states apply the law of the state in which the agreement was executed.