Before You Sign a Contract, Consider Which State’s Law Will Apply to Its Interpretation

When people review a contract, they understandably focus on the central terms, such as price, payment schedule, deadlines, and what each side is required to do.

One provision that often gets overlooked, however, is the choice-of-law provision. You will often find this item covered toward the end of a written contract, sometimes buried under a heading like “Miscellaneous.” It may not be the most exciting part of the contract, but it is important to review and consider.

Just because a company is doing business with you in Maryland, that does not necessarily mean that Maryland law will apply if a dispute arises. Some contracts provide that the terms are governed by the laws of another state. Others may require disputes to be resolved through arbitration, or through a lawsuit to be brought in another state.

These provisions may not seem important when you are signing the contract, or thereafter while things are going well. But if a dispute comes up later, these can have a real impact on where you can bring a claim, where you can be sued, what law applies, and what options you have.

The time to identify these issues is before the contract is signed, not after a dispute develops. By the time there is a problem, the contract has already been signed, and the parties have to abide by the provisions they agreed to.

Before signing an important contract, take a few minutes to look for the less exciting terms, such as those dealing with choice of law, where disputes must be adjudicated, and arbitration. If you are unsure what those provisions mean, it may be worth having a Maryland attorney review the contract before you sign it.

The attorneys at Lewicky O’Connor Hunt & Meiser, LLC have experience reviewing, negotiating, and drafting a wide range of agreements, including commercial and business contracts and residential and commercial leases. While every agreement is different, many of the same issues come up again and again. Whether you need help understanding an agreement before you sign it, negotiating its terms, or dealing with a dispute after the fact, we are happy to help.