Modern Approach - Contracts

Question 1

Statutory Solutions

Answer 1

General Rule: statutory rules on choice of law generally favors party autonomy

Uniform Commercial Code (the law that the parties select controls)
When a transaction bears a reasonable relation to this state and also to another state or nation the parties may agree that the law either of this state or of such other state or nations shall govern their rights and duties.

Question 2

Rule of party autonomy (Second Restatement) - Contracts:

Answer 2

i. Choice of law provisions will control if the issue is one which the parties could have resolved by an explicit provision in their agreement directed at that issue
ii. Choice of law provisions will control even if the issue is not one which the parties could have resolved by including the provision, unless:
1) The chosen state has no substantial relationship to the parties or transaction and there is no other reasonable basis for the choice, or
2) Application of the chosen law would be contrary to a fundamental policy of a state which has materially great interest that the chosen state

Question 3

Rule of party autonomy (Second Restatement) - Contracts:

Answer 3

iv. In order for a choice of law provision to be valid, (a) the parties must have the capacity to choose the applicable law, (b) they must have consented to the choice, (c) there must have been a meeting of the minds, and (d) it must have been done in proper form. The following laws may be used to determine validity:
1) The law of the forum
2) The law that would have been applicable if the choice of law provision was not included
3) The law chosen by the parties

Question 4

Siegelman (Ship NY to England)

Answer 4

Traditional rule that the applicable law is the law of the state where the contract was executed is a presumptive rule, but can be overcome.
i. Express declaration that some other law will apply.

uphold clause (apply ENG law); requirements: 1) bona fide choice of law, 2) relationship to contract;

1) Contractual terms cannot select law in order to evade the policy of prohibiting certain contractual terms (e.g., limits on party autonomy, rules protecting infant and incompetent parties)

Question 5

Pritchard

Answer 5

The parties intended the contract to be performed somewhere else.

Presumption of validity- contract is made to be enforced therefore parties would have chosen LA law, because K would be unenforceable under NY laws.

LA law applies b/c the parties intended for the L to be performed in LA where it was valid.

Question 6

Wyatt (Spanish couple’s assets in NY)

Answer 6

parties have presumptive control over transaction; where planning/reliance is at maximum, choice of law/party autonomy will be honored.

held that NY law applied because NY public policy asserted control over property within its jurisdiction

Question 7

Rule of Validation:

Answer 7

i. Parties cannot select controlling law that would invalidate the contract
ii. This rule overrules party autonomy