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Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: October 30, 2019

Non-New York Statutes do not Invalidate Contracts that Chose New York Law

On October 24, 2019, the First Department issued a decision in ABB, Inc. v. Havtech, LLC, 2019 NY Slip Op. 07693, holding that a non-New York statute cannot be used to invalidate a contract that chooses New York law, explaining:

As a preliminary matter, the parties’ agreement falls within the ambit of General Obligations Law § 5-1401, and thus, regardless of whether there is a connection between the transaction and New York, New York will enforce the choice of law clause.

Defendant’s sole defense and counterclaims were based on its argument that the Maryland Dealer Act applied to invalidate the termination without cause and other provisions of the agreement. The motion court properly rejected the application of Maryland law. IRB makes clear that no such choice of law analysis is proper in light of the clear choice of New York law and the legislative purpose of General Obligations Law § 5-1401.

We reject defendant’s argument that we are required to consider the public policy concerns of the Maryland Dealer Act in determining this dispute. Non-New York statutes do not invalidate contracts that chose New York law and are valid and enforceable under New York law.

(Internal 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. 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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