Over the past half century, courts in the United States have developed canons of construction that they use exclusively to construe choice-of-law clauses. These canons are consistently applied by state and federal courts. They play an important role in determining the meaning of choice-of-law clauses and, by extension, the law that will be applied to resolve disputes that come before the courts. To date, however, these canons have attracted little attention in the academic literature. This Article provides the first comprehensive taxonomy of the canons of construction that U.S. courts use to construe choice-of-law clauses. These canons include:1. The canon in favor of internal law. This canon holds that when the parties choose to have their contract governed by the “law” or “laws” of a particular jurisdiction, they intend for courts to apply that jurisdiction’s internal law rather than its whole law.2. The canon in favor of substantive law. This canon holds that when the parties choose to have their contract governed by the “law” or “laws” of a particular jurisdiction, they intend for courts to apply that jurisdiction’s substantive law rather than its procedural law.3. The canon of linguistic equivalence. This canon holds that regardless of whether the parties choose to have their contract “governed by” or “interpreted in accordance with” or “construed in accordance with” the law of a particular jurisdiction, the result will generally be the same.4. The canon of federal inclusion and preemption. This canon holds that when the parties select the law of a particular U.S. state, the law of that state will be deemed to include any relevant provisions of U.S. federal law. This canon further holds that federal law will preempt state law if the two are in conflict.5a. The canon against non-contractual claims. This canon holds that a generic choice-of-law clause governs only causes of action sounding in contract. It does not govern tort and statutory claims. If the parties want the choice-of-law clause to apply to tort and statutory claims, they must draft the clause more broadly. This canon is followed by courts in Florida, New York, and Texas.5b. The canon in favor of non-contractual claims. This canon holds that a generic choice-of-law clause governs tort and statutory claims when they are related to the contract. If the parties want the choice-of-law clause to apply exclusively to contract claims, they must draft the clause more narrowly. This canon is followed by courts in California, Minnesota, and Virginia.The Article then goes on to consider the normative question of whether these canons accurately reflect the preferences of most contracting parties. Drawing upon contract studies and lawyer interviews, the Article shows that some — but not all — of the existing canons are consistent with these preferences.The Article’s final contribution to the literature relates to conflict-of-laws rules. When two canons point in different directions, the courts must decide whether to follow (1) the canons of the forum, or (2) the canons of the state named in the choice-of-law clause. Most U.S. courts apply the canons of the forum. The Article argues that the courts should instead apply the canons of the state named in the clause for four reasons. First, it ensures that the choice-of-law clause will have a consistent meaning across jurisdictions. Second, it is more in keeping with the terms of the hypothetical bargain that most parties would strike ex ante. Third, it is consistent with the approach set forth in the Second Restatement on Conflict of Laws. Fourth, and finally, it respects the ability of the parties to choose how their contract will be interpreted.
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Nov 29, 2016
Kseniya Bocharnikova + 1
Open Access
