Bar Exam Conflict of Laws 2 — Questions and Answers
Question 1: Under the UCC and Second Restatement, parties to a commercial contract may generally choose governing law only if:
- They are both merchants under the UCC
- The chosen state has a reasonable relationship to the transaction or parties (Correct answer)
- They choose the law of the forum state
- Both parties are domiciled in the same state
Correct answer: The chosen state has a reasonable relationship to the transaction or parties
Party autonomy in choice of law is respected so long as the chosen state bears a reasonable relationship to the parties or transaction; otherwise the clause may be disregarded.
Question 2: A state need NOT give full faith and credit to a sister-state judgment if:
- The judgment is for a large monetary amount the forum considers excessive
- The rendering court lacked personal or subject matter jurisdiction (Correct answer)
- The rendering court applied law different from the forum's substantive law
- The losing party can demonstrate the decision was incorrect on the merits
Correct answer: The rendering court lacked personal or subject matter jurisdiction
Full faith and credit does not require enforcement of a judgment rendered by a court that lacked subject matter or personal jurisdiction; jurisdictional defects are a recognized defense.
Question 3: In choice of law for disputes involving real property, courts traditionally apply:
- The law of the owner's domicile at the time of the transaction
- The law of the place where the property is located (lex situs) (Correct answer)
- The law chosen by the contracting parties
- The law of the state with the most significant relationship to the parties
Correct answer: The law of the place where the property is located (lex situs)
The situs rule governs real property: the law of the state where the land is located controls questions of title, conveyance, and interests in land.
Question 4: The 'public policy' exception in conflict of laws permits a forum court to:
- Always apply its own law whenever another state's law is less favorable to the plaintiff
- Refuse to apply another state's law that violates a fundamental policy of the forum (Correct answer)
- Ignore the Full Faith and Credit Clause when the foreign judgment seems unfair
- Apply international law in lieu of any state's domestic law
Correct answer: Refuse to apply another state's law that violates a fundamental policy of the forum
Courts may decline to apply foreign law only when doing so would violate a strong, fundamental public policy of the forum, not merely because the result differs from forum law.
Question 5: Under the First Restatement, the validity of a contract is determined by the law of:
- The place of performance
- The place where the contract was made (lex loci contractus) (Correct answer)
- The domicile of the offeror
- The state chosen by the parties
Correct answer: The place where the contract was made (lex loci contractus)
The First Restatement §332 provides that the law of the place of contracting governs the formation and validity of a contract.
Question 6: For conflict of laws purposes, a corporation's domicile is:
- Every state in which it transacts substantial business
- Its state of incorporation (Correct answer)
- Its principal place of business
- The state in which a majority of its shareholders reside
Correct answer: Its state of incorporation
A corporation is domiciled in its state of incorporation for conflict of laws purposes, which controls questions such as internal affairs and personal jurisdiction by domicile.
Question 7: Under the 'better law' approach to conflict of laws (followed in some states), courts:
- Always apply forum law as a default
- Evaluate and apply the law that produces the superior outcome based on policy and fairness considerations (Correct answer)
- Apply the law of the state whose precedent is oldest and most established
- Apply federal common law to resolve any interstate conflict
Correct answer: Evaluate and apply the law that produces the superior outcome based on policy and fairness considerations
The 'better law' approach, associated with Professor Robert Leflar, weighs five choice-influencing considerations including which state has the 'better rule of law.'
Bar Exam Conflict of Laws 2
Under the UCC and Second Restatement, parties to a commercial contract may generally choose governing law only if: