Party Autonomy rule of validation choice-of-law clauses

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. … (3) If the place of negotiating the contract and the place of performance are in the same state, the local law of this state will usually be applied, except as otherwise provided in §§ and 203.

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.

- 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)

2 nd Rest 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.

2nd Rest 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 concerning NH house 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

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

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

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)

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.