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Current Developments in the Commercial Divisions of the
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Posted: April 26, 2018

Parties Waived Contract’s Choice of Law Provision By Arguing New York Law Rather than Chosen Law

On April 13, 2018, Justice Masley of the New York County Commercial Division issued a decision in Duncan-Watt v. Rockefeller, 2018 NY Slip Op. 30678(U), holding that the parties to a lawsuit had waived the choice of law provision in their contract by failing to cite the chosen law in their arguments, explaining:

The parties also dispute whether, by relying on New York law for this motion, defendants waived their right to enforce the Australian choice-of-law provision contained in the License Agreement. Choice of law clauses are enforced absent a strong showing that the clause is a product of fraud or overreaching, or that enforcement would contravene strong public policy of the forum. The parties may, however, by conduct or consent, waive their choice of law provision by reliance on the law of another state.

For this motion only, both parties have waived the choice of law provision in the Licensing Agreement by relying solely on New York law in their memoranda of law. Defendants’ footnote, that they are not waiving the choice of law provision by citing New York law, does not require a contrary finding. The parties have failed to make any effort to explain the law of the New South Wales, as it applies to the claims arising from the Licensing Agreement, or cite any law from that jurisdiction. Thus, the court applies New York law to these claims in reviewing this motion to dismiss.

(Internal quotations and citations omitted).

The parties to commercial contracts often chose both the forum in which any dispute over the contract will heard and the law governing the interpretation of the contract. New York courts typically enforce such provisions. However, where, as here, the parties waive their rights under a choice of law clause, the court can decline to enforce it. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have a question regarding which law governs on contract and in which forum a dispute over the contract may be heard.

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