Governing Law Clause
A governing law clause may be used to specify the legal rules that will govern a contract (e.g. Californian law, English law or South African law). This has an impact upon the way in which the contract will be interpreted and the legality or enforceability of the provisions of the contract.An example of a simple governing law clause is this:
This Agreement shall be governed by and construed in accordance with .......... law.
In most if not all jurisdictions, the courts will sometimes intervene in a contract to apply their own laws, notwithstanding a governing law clause. For example, the courts may apply their own consumer protection or competition law.
The interaction of governing law clauses with the rules of private international law (conflict of laws) can be complex.
The idea of governing law is related to, but distinct from, the idea of contractual jurisdiction. Contractual jurisdiction clauses specify the courts that (the parties want to) have the right to adjudicate disputes relating to the contract.