Governing Law

Governing law clauses are standard boilerplate that carry significant practical consequences. The choice of governing law determines which state's or country's contract law applies to interpret ambiguous terms, resolve disputes, and assess the enforceability of specific provisions. Delaware law governs a majority of US commercial contracts because Delaware courts are sophisticated, have deep contract law precedent, and courts in most states respect Delaware choice-of-law clauses.

Governing law must be distinguished from jurisdiction (which court hears disputes) and venue (the location of proceedings). A contract can be governed by New York law while requiring disputes to be litigated in California courts — an unusual but valid combination. For non-compete agreements, courts in some states (like California) will not enforce a foreign governing law clause if it circumvents that state's strong public policy against non-competes. Document intelligence can extract governing law and jurisdiction provisions across a contract portfolio and flag agreements with governing law that may be inconsistent with where the relevant parties operate.