Everyone has seen it in their contracts and wondered what it
means. It is always in the miscellaneous
section at the end of agreements. It
usually says something like, “without regard to the conflicts of law provisions
therein.” The full text is “This
Agreement shall be governed by the laws of the State of Texas, without regard to the conflicts of
laws provisions therein.” Why is it
included?
This provision is used to take interpretation of an agreement
outside of the state law where a cause of action occurs. For instance, if you have an agreement with a
company that is in California there could be a
cause of action that arises in California. However, you want the laws of Texas to apply. You have added a “choice of law” provision
for that very reason. Unfortunately,
most states have a rule that says the law of the state where the cause of
action arose governs that cause of action.
This would mean that if the cause of action happened in California, even if you said you wanted Texas
law to apply, Texas law would point back to California. By adding the “without regard to the
conflicts of law provision” we are able to negate the Texas
law that points back to California. That is why most choice of law provisions
contain the described clause and you should think about verifying that yours
does too.
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