Conflict of Laws Flashcards

A New York court must decide which state's law governs a contract that has no choice-of-law clause. Which approach does New York apply?

Answer: A flexible center-of-gravity or grouping-of-contacts analysis

New York applies a flexible center of gravity, or grouping of contacts, inquiry to contracts that do not contain a choice-of-law provision (Auten v Auten, 308 NY 155 [1954]).

Which of the following are the significant contacts that a New York court weighs under the grouping-of-contacts analysis for a contract without a choice-of-law clause?

Answer: The places of contracting, negotiation, and performance, the location of the subject matter, and the domicile or place of business of the parties

Significant contacts are the places of contracting, negotiation and performance; the location of the subject matter of the contract; and the domicile or place of business of the contracting parties.

A Delaware company and a Texas company sign a $500,000 supply contract that states New York law governs. The contract has no connection to New York. The Texas company later argues that the clause is unenforceable for lack of a reasonable relation to New York. Is the clause enforceable?

Answer: Yes, under General Obligations Law 5-1401, which allows the choice whether or not the contract bears a reasonable relation to New York

GOL 5-1401 lets the parties to a contract covering at least $250,000 agree that New York law governs, whether or not the contract bears a reasonable relation to New York.

An executive based in California and a New York employer sign a $400,000 employment agreement for the executive's personal services that selects New York law. California has no relation to New York for this dispute. Does GOL 5-1401 automatically make the New York choice-of-law clause enforceable?

Answer: No, because GOL 5-1401 does not apply to contracts for labor or personal services, so the clause is tested under the general rule

GOL 5-1401 does not apply to any contract for labor or personal services, or relating to personal, family or household services. The clause is then tested under the general rule.

A $2,000,000 loan agreement between a foreign corporation and a New York lender selects New York law under GOL 5-1401 and contains the foreign corporation's agreement to submit to the jurisdiction of New York courts. The lender sues in New York, and the borrower moves to dismiss on the ground of inconvenient forum. What is the result?

Answer: The motion must be denied, because GOL 5-1402 and CPLR 327(b) bar a forum non conveniens dismissal

When a contract of at least $1,000,000 selects New York law under GOL 5-1401 and the foreign party agrees to New York jurisdiction, GOL 5-1402 permits the action, and CPLR 327(b) forbids a stay or dismissal on inconvenient forum grounds.

Which pair of dollar thresholds correctly describes the New York statutes on choice of law and choice of forum clauses?

Answer: GOL 5-1401 requires at least $250,000; GOL 5-1402 requires at least $1,000,000

GOL 5-1401 (choice of law) applies to transactions of not less than $250,000, and GOL 5-1402 (choice of forum) applies to transactions of not less than $1,000,000.

A contract between two commercial parties states that it is governed by New York law. A dispute arises, and one party argues that New York's conflict-of-laws rules would point to the law of another state. How should a New York court treat the clause?

Answer: Apply New York substantive law, because a New York choice-of-law clause selects substantive law and not New York's conflicts rules

A clause selecting New York law is read as selecting New York's substantive law, not its conflict-of-laws rules, so there is no renvoi to another state's law.