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LGST 219 - Class 13 Notes

LGST 219 - Class 13 Notes - CLASS 13(Oct 26 Choice of Law...

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CLASS 13 (Oct. 26): Choice of Law and Party Autonomy 1] We don't always respect party autonomy. Sometimes the court will override party autonomy. The court will review the choice of forum clause. a. Is there fraud or coercion in the agreement so that one party did not freely acknowledge to the forum? b. Is the choice of law reasonable and connected to the case (in the U.S.) c. Is the choice of law clause a device to sidestep the fundamental forum policies of the state whose law would normally apply? 2] Choice of court agreements is not a convention that's enforced. 3] When parties pre-select a court, the rule is that courts should respect that decision. There are some reservations, however. 4] Contract of Adhesion - when we have one party of vastly superior power and you either agree or you don't agree with the contract’s choice of forum that the stronger party proposes to you. What we say here is that we don't have a "bargained for exchange" in which two parties bargain to a forum. a. When we have a freely bargained for exchange, there are tradeoffs between the two parties, there are concessions. In this way we have a reason to uphold the choice of forum. It’s fair. b. But with contracts of adhesion it’s different. There is no real bargaining taking place. c. Traditionally our courts were very skeptical in upholding choice of forum or choice of law in Contracts of Adhesion. In the old days, the tendency was to question these clauses. The judge says that you're the weaker party and you never make a meaningful agreement . There’s no bargained for exchange. d. But now we're moving in the opposite direction. Courts are accepting contracts of adhesion more and more without much concern for the little guy. 5] Choice of Law clauses: a. Is it reasonable ? Is there a close connection ? b. A law of country B is selected in a contract. We might ask: Is the contract reasonably connected to the law of that country. We might be skeptical about selecting it because the concern is evasion of mandatory norms or fundamental policies .
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(b.i) These are protective standards that represent ideas about how society should be ordered. (b.ii) They are typically about consumer protections, antitrust, employee rights, embargos, etc. c. We may uphold an unreasonable choice of law if it is not used as a device to get around these mandatory norms or fundamental policies. (c.i) This is where party autonomy becomes something detrimental to the public interest. (c.ii) We can apply an unreasonable choice of law, just not where it violates mandatory norms or fundamental policies. d. In the US standard we are looking for a reasonable basis for having this law selected and if you see that it is unreasonable (i.e. it doesn't have any connection) and/or if we're seeing that there's a country that has a materially greater interest and its interests are more affected in this case, and has fundamental policies it should apply, then in the US, we are going to say that this country/state has materially greater interest and fundamental policies, therefore we're going to apply it's laws instead.
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