Mon. Feb. 17

Party Autonomy

• Choice-of-law clauses in contracts• Choice of law that validates contracts– Could be used even when no choice-of-law

provisions exists– Could be used to choose law other than the law in

the choice-of-law clause

Rest 2d § 188. Law Governing In Absence Of Effective Choice By The Parties

• (1) The rights and duties of the parties with respect to an issue in contract are determined by the local law of the state which, with respect to that issue, has the most significant relationship to the transaction and the parties under the principles stated in § 6.

Rest 2d § 187. Law Of The State Chosen By The Parties

• (1) The law of the state chosen by the parties to govern their contractual rights and duties will be applied if the particular issue is one which the parties could have resolved by an explicit provision in their agreement directed to that issue.

• default rules v. mandatory rules

• Whether the parties could have determined a particular issue by explicit agreement directed to that issue is a question to be determined by the local law of the state selected by application of the rule of § 188. Usually, however, this will be a question that would be decided the same way by the relevant local law rules of all the potentially interested states. On such occasions, there is no need for the forum to determine the state of the applicable law.

- a NY court is considering a contract entered into in NY between a 17 year old NYer and another NYer - under NY law the contract is voidable by the 17 year old- will the court enforce a provision stating that the contract is not voidable by any party? - will the court enforce a provision stating that PA law (which has no protection for 17 year olds) applies?

- a NY court is considering a contract entered into in NY between a 17 year old NYer and a Pennsylvanian - will the court enforce a provision stating that PA law (which has no protection for 17 year olds) applies?

Seigelman v. Cunard White Star Line (2d Cir 1955)

• 187(3) In the absence of a contrary indication of intention, the reference is to the local law of the state of the chosen law.

187(2) The law of the state chosen by the parties to govern their contractual rights and duties will be applied, even if the particular issue is one which the parties could not have resolved by an explicit provision in their agreement directed to that issue, unless either(a) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties' choice, or

• (b) application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which, under the rule of § 188, would be the state of the applicable law in the absence of an effective choice of law by the parties.

• Mass Insurer contracts with NH insured• K says law of Mass applies• K entered into in NH• insured misstates the distance of house from

fire hydrant• house burns down• under law of Mass, no rights under K because

of misstatement• under law of NH, still has rights• assume that most significant relationship is

with NH law

• P (Mass) and D (Maine) enter into a contract in Maine with performance in Maine

• The contract says that the law of Mass applies• Under Mass law D has no capacity to contract,

because she is a married woman• Under Maine law, she has such a capacity

• On occasion, the parties may choose a law that would declare the contract invalid. In such situations, the chosen law will not be applied by reason of the parties' choice. To do so would defeat the expectations of the parties which it is the purpose of the present rule to protect. The parties can be assumed to have intended that the provisions of the contract would be binding upon them. If the parties have chosen a law that would invalidate the contract, it can be assumed that they did so by mistake. If, however, the chosen law is that of the state of the otherwise applicable law under the rule of § 188, this law will be applied even when it invalidates the contract. Such application will be by reason of the rule of § 188, and not by reason of the fact that this was the law chosen by the parties.

interest analysis

- P (NY) is suing D (NY) concerning a car accident in New York, under a law providing for treble damages for accidents on highways- D, appeals to a law limiting recovery to $10,000 when against police officers who were acting in the course of his duty

- One statute says vehicles are not allowed in the park- Another statute says children must be in strollers

false conflicts

- P (NY) sues D (NY) concerning a car accident in NY- NY has law saying anyone who is grossly negligent shall be liable for harm- NJ has law saying anyone who is negligent shall be liable for harm

– Millikan v Pratt• Mass D contracted with Maine Ps to

guarantee D’s husband’s payment• Sent by her husband by mail from Mass

to Maine• D’s husband did not pay• Ps demanded of D• She refused• Mass had law not allowing married

women to contract as surety• Maine didn’t

true conflicts

Schmillikan v SchmrattMaine D contracted with Mass Ps to guarantee D’s husband’s paymentSent by her husband by mail from Maine to MassD’s husband did not payPs demanded of DShe refusedMass had law not allowing married women to contract as suretyMaine didn’t

false conflicts

• Babcock v. Jackson (NY 1963)• NY P – guest in car w/ NY D• Crashed into stone wall in Ontario• Does Ontario’s guest statute apply?

• Dym v Gordon (NY 1965)• P and D both NY domiciliaries• BUT taking courses at U of Colo• Collision with another vehicle (from Kansas) in

Colo• Does Colo guest statute apply?

Tooker v. Lopez (NY 1969)

Schultz v Boy Scouts of America (NY 1985)

- assume the Schultz’s are domiciled in NY- the Boy Scouts are domiciled in TX- but the scout camp is always in NJ, where the molestation occurs

• The three reasons most often urged in support of applying the law of the forum-locus in cases such as this are: (1) to protect medical creditors who provided services to injured parties in the locus State, (2) to prevent injured tort victims from becoming public wards in the locus State and (3) the deterrent effect application of locus law has on future tort-feasors in the locus State.

• The first two reasons share common weaknesses. First, in the abstract, neither reason necessarily requires application of the locus jurisdiction's law, but rather invariably mandates application of the law of the jurisdiction that would either allow recovery or allow the greater recovery. They are subject to criticism, therefore, as being biased in favor of recovery.

• Finally, although it is conceivable that application of New York's law in this case would have some deterrent effect on future tortious conduct in this State, New York's deterrent interest is considerably less because none of the parties is a resident and the rule in conflict is loss-allocating rather than conduct-regulating.